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Research Technical Services, Ltd.
Serving the Insurance Industry
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This Week's E-Reader - LLC'S
REPRINT OF INFORMATION FROM EMAIL BY JERRY FULMER
1. Management by members or managers
A limited liability company may be managed either by (a) the members or (b) one or more managers. A "member" is an owner of the limited liability company. If a limited liability company is managed by the members, then the owners are directly responsible for running the company.
A "manager" is a person elected by the members to manage the limited liability company. In this context, a manager is similar to a director of a corporation. A manager can be, but is not required to be, a member. If a limited liability company is managed by managers, then its members are not be directly responsible for running the company.
Whether an LLC should be managed by members or managers depends on several factors, including:
- The number of owners;
- The type of business;
- Where the owners are located;
- How involved the members will be in the operations of the LLC.
Management by members is usually the best option for LLCs that have only one member or just a few members, all actively participating in the affairs of the LLC. If there are many members, on the other hand, including some that do not actively participate in the operations of the LLC (such as silent partners), then management by managers may be the best option. * And in some cases, the "members" of the LLC could be 1 or more corporations - not just 1 or more individuals. *
2. Officers
Regardless of how a limited liability company is managed, it can still appoint officers to run the day-to-day operations of the company. An LLC is not, however, required to have officers. Officers serve at the pleasure of either (a) the managers, if the limited liability company is managed by managers, or (b) the members, if the limited liability company is member-managed. Members or managers may both be officers. There is no limit on the maximum number of officers, nor is there a limit on the number of offices that a person may hold. In fact, the same person may hold all offices. * And remember, having an officer title does not mandate that the individual is covered by WC on the policy; you must verify if the individual(s) is a true member or appointed
manager of the LLC, and then if they have been endorsed for coverage. *
3. Registered Agent
Each LLC must have a registered agent, the person designated to accept official notice if the LLC is "served" with a lawsuit. A registered agent must be either (1) an adult living in the state of formation with a street address (P.O. boxes are not acceptable) or (2) a company registered with the Secretary of State in the state of formation. The LLC Articles of Organization, on file with the Secretary of State, and updated annually, will show all the "ownership" information.
As previously mentioned, one of the advantages of forming an LLC in your home state is that any of the members, managers or officers can act as the registered agent. However, there are some advantages to having another person or company act as your registered agent. First, this adds an extra layer of privacy, since the name and contact information for the registered agent is publicly available. Second, this ensures that if your LLC is named in a lawsuit, no one will surprise you at home on a Sunday night with court papers.
4. Endorsements
Lastly - check your states ruling on the status of LLC member/managers--are they officers or partners / are they endorsed on - or off, for coverage.
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