How do I determine whether my company is “member managed” or “manager managed”?

In most states, LLCs are member-managed by default under state law.

In a member-managed LLC, the owners have collective control over company decisions. A member-managed LLC places management authority in the owners of the LLC (called “members”). Each owner has a voice in decision-making.

Manager management is appropriate when an LLC has investors, as most investors are passive investors or “silent partners.” In a manager-managed LLC, the owners elect a manager or managers to handle day-to-day business decisions. The manager is the main legal agent of the LLC and can make decisions on behalf of the business without waiting for all members to approve.