For some, the decision to form a Limited Liability Company (LLC) is simply an administrative task. However, for those who are running businesses that have employees or plan to make profits in the future, this decision has far-reaching consequences. 

One of the most important decisions when forming an LLC is whether it will be managed by members or managers. This post will explore both options and offer guidance on how they may apply in different situations.

Manager Managed LLC

In most cases, the LLC’s management structure is determined by its members. But there are some instances in which it may be beneficial to delegate these responsibilities to one or more other people that you trust – even if they’re not a member of your company!

Whether you plan on being an active owner and actively participate at all levels of operations within the business as well as with outside partners or whether passive owners only want information about progress without wanting any input into decision making processes, delegating responsibility can help them feel comfortable while still keeping everything running smoothly.

Managers of a manager-managed LLC are able to make decisions quickly and with less burden than if the company were member managed with many members that may block quick decision making. If your startup is large in size or has many owners, you may want to consider this type of organizational structure for these reasons!

Member Managed LLC

You might be interested to know that many people who set up an LLC choose member-management, which means all the members (owners of the LLC) share responsibility for operating their business. This approach is more common in part because most LLCs are small businesses with limited resources and they don’t need a separate management level to operate. Unlike corporations, LLCs have a streamlined organizational structure — without officers or boards of directors — so it’s often chosen by those looking for direct involvement in managing and running their own company.

If you and your LLC partners want to take charge of the business, then a member-management LLC structure is for you. For instance, if all members are actively involved in making recipes, baking goods, or hiring employees on an everyday basis – they will need member management. If you have more than one member or owner, it is recommended to have an operating agreement so that all members/owners know their roles, responsibilities, contributions, equity percentages, etc. A corporate lawyer will be able to help draft such an agreement.

Manager Managed vs Member Managed LLCs

If you are responsible for a small company and it only has one owner, then the Member-Managed LLC is generally the way to go. A single individual can make decisions about the business as necessary without having to go through other owners in order to get something done.

LLC’s are often chosen for their flexibility with management. If you want to add a manager or managers, there is no need to worry about starting from scratch as the LLC form already comes equipped with these features. 

It is a good idea to have an operating agreement as well to govern the LLC. If you fail to create your own operating agreement, then the rules of a state’s LLC laws will apply. This may not be what is best for your business so make sure that you have a written Operating Agreement before it becomes too late or asks your business lawyer to do this for you!

It’s not uncommon for corporations to split up and go their separate ways. One company may buy out the other, or they may just make a clean break from one another. However, there are some considerations that need to be taken in order for the separation process to be as smooth as possible. 

This post will give you some insights on what those considerations might be so you can decide how best to proceed with your own corporate divorce if this applies to you. 

What is a Corporate Divorce?

In the workplace, there are many cases of divorce: between employees, coworkers, and employers. 

A Corporate Divorce is when an employer breaks up with their contractor or business partner with whom they have a contract. If you’re going to be the one ending your relationship with someone in this way, it’s important to know what you can do and what will happen if you don’t take any action.

Checklist If You Are Considering a Corporate Divorce

Here are some of the things worth considering when you have to split up with your business partners:

Goal

If you’re not sure what to do, take a day or two and think about your options. When facing any big decision like this, it’s always best to be well informed before moving forward.  

The most important thing is figuring out the general path that will work for both of you going forwards-  just remember that there are many different paths available depending on how much time you have invested in the relationship so far, as well as other considerations such as whether one party has more power than the other.

Budget

Business divorces are a time of great emotion and stress. The other side may be driven by emotions throughout the process, which can lead to poor decisions in an economic sense when it comes to finances. 

Even if they do realize that their decision is economically irrational before any money has been lost, some businesses/individuals end up wasting valuable resources on options with little likelihood of success because they find themselves unable to let go or stop trying for something more than what is available under current circumstances.

Strategy

The number of options available to you when your company is faced with a lawsuit vary and depend on what kinds of goals, budgets, or relationships are most important. If maintaining the business relationship between stockholders is important but individual owners/stockholders don’t have much money for litigation, then maybe getting together as one side in a class action suit could make sense. 

Prepare for Anything to Happen

The emotional turmoil and upheaval that goes with a business divorce can make people behave irrationally, but you don’t have to be one of them. If your lawyer has business experience in the type of case you’re dealing with, then he/she will be able to provide some good advice on how best to proceed. 

But remember: no matter what happens, it’s usually better to act than just sitting back waiting for things to happen – at least if we know about issues ahead of time, we can prevent being caught off guard when something does go wrong.

Set up an appointment with one of our experienced corporate lawyers here at Raich Law to help you get your company on a stable track. We can provide support for any stage of the process from A-Z, or we’ll walk you through every step in preparing for the worst-case scenario and navigating corporate divorce’s roughest waters!