Picking the Right Management for Your Limited Liability Company

Rincker Law Business/Commercial Law Leave a Comment

So you’ve decided to form a limited liability company — congrats on your new business venture.  After filing the Articles of Organization with the Department of State and complying with any publication requirement, the next step is to draft the LLC’s operating agreement.  In doing so, you must decide whether you want your limited liability company to be member-managed or manager-managed (wow-that’s a tongue tie..- try saying it three times really fast…).

A member-managed LLC has a decentralized management whereas a manager managed LLC has centralized managed.  It’s important to keep in mind that the “manager” of the LLC does not have to be a member.  The manager typically gets a salary for his/her/its labor and controls most of the business operations of the LLC including day-to-day operations.  In either scenario, both members and managers will typically enjoy that wonderful liability shield from debts and obligations from the LLC.  In a manager-managed LLC, the non-manager members won’t have much control over the day-to-day decision making but will enjoy limited voting rights with the admission of new members, dissolution and liquidation of the LLC.

So what type of management is best for your farm or agri-business?  That depends on your unique circumstances.  I encourage you to seek counsel from an attorney licensed in your jurisdiction to help form the limited liability company and draft the operating agreement.  If you already have an operating agreement put in place, remember that it is an internal document and may be amended to allow for a different type of management so long as certain procedures are followed.

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