Learn everything you need to know about LLC titles.
This is a must-read before you start the selection process.
What Is The Meaning Of A Limited Liability Company Title?
Choosing LLC titles for your limited liability company (LLC) is not necessarily mandated by any law or legal policy but it is always a worthy step when defining title roles and responsibilities in your business organization.
Looking to start a business? Check out our guide on how to start an LLC today.
Importance Of LLC Titles And Tips For Selecting Suitable LLC Titles
An LLC title refers to a position/designation to drive business processes and appears on all business documents filed with the state such as contracts or agreements entered into by the LLC members. Further, LLC titles can be assigned to the management team and lower-level staff among others.
Among others, LLC titles include:
- Project Manager
What Is The Need For Limited Liability Company Titles?
Business owners can benefit in numerous ways from using limited liability company (LLC) titles. All organizations rely on a well-defined management hierarchy to assign particular duties to specific individuals in the business organization. The following are some other advantages of using titles.
Advantages Of Using Limited Liability Company Titles:
- LLC titles help business owners to separate roles for different employees in the organization
- They help to simplify the hierarchy based on powers and responsibilities of specific members
- LLC titles help to determine the members to answer specific questions in the business organization
- LLC titles help LLC members to determine who to approach to respond to certain concerns and questions
What Official Name Is Given To The Owner Of An LLC?
In many circumstances, the owner of the LLC is called a “member”. A member does not necessarily have to be an individual; the member could be a corporation, trust, estate, partnership, or another kind of legal entity.
Who Is An LLC Member?
An LLC member refers to individuals who are the shareowners/stakeholders in an LLC. LLC members are paid dividends according to the profits realized by the LLC.
A general partner is an individual who becomes a member of an LLC; a general partner is also a member of the board of directors who run and manage the daily operations of the LLC.
Certain requirements need to be met for you to become an LLC member. For instance, you must show proof of your identity and place of residence. Additionally, you must complete your membership application by submitting particular information about your business and yourself.
It is always important to talk to a lawyer before you append your signature on any paperwork concerning your LLC.
What Are The Management Structures For An LLC?
There are two types of management structures open during the formation of an LLC. They are manager-managed and member-managed.
What Are member-managed LLCs?
In this management structure, the owners of the LLC, who may be referred to as “member-manager,” run and manage the everyday work operations of the company. A member-managed LLC is allowed to hire employees and determine how the business will run its work.
Simultaneously, the LLC managing members are liable for tax payment on behalf of the company and are expected to provide personal assets to secure debts taken on by the company. This is why it is advisable to consult a legal and tax expert who focuses on business law to guide you through the legal processes for LLC formation and management.
Simultaneously, the LLC managing member needs tax guidance from a Certified Public Accountant (CPA). For the best tax advice, look for a professional familiar with state laws and who can guide new members well through the legal framework.
Please note: The entity’s annual report has both legal and financial guidelines to safeguard the LLC members from liability. For instance, a single-member LLC has only one individual member taking care of the operations.
What Are manager-managed LLCs?
A manager takes care of the everyday operations of the LLC in a manager-managed LLC. The manager is mandated to employ new staff and decide how to manage the business company effectively.
The two types of LLC managers are external and internal managers. External managers usually work independently of the organization; the LLC owner contracts these managers to help run the business. On the other hand, internal managers work inside the organization and are often included in the entity’s executive team.
Comparison Of member-managed LLCs vs. manager-managed LLCs
Both types of LLCs, i.e. member-managed and manager-managed LLC have their advantages and drawbacks depending on, among others, the size of LLC you need, your budget, and business objectives.
For a member-managed LLC, the members retain the power to direct and manage the operations of the company. Small business owners may find the member-managed LLC favorable because it is flexible and its formation process is simple and affordable.
Contrastingly, manager-managed LLCs are more appropriate for bigger companies having numerous shareholders and other investors. Consequently, they are more complex and harder to form, which will cost you extra when you have to hire a professional manager to help set up this type of LLC.
What Are Examples Of LLC Titles
As earlier mentioned, LLCs are not legally obliged to assign titles to their members. However, if they want, they are allowed to designate titles and record them in their operating agreements.
Officer titles are the most frequently used LLC titles. LLC officers are tasked with the management of everyday company procedures. They include the president, the vice president, the secretary, and the treasurer.
LLC officers are the company managers. Some of their most important roles include the hiring of staff, payment of bills, and ensuring all processes are executed according to plan. Other responsibilities include taking care of the legal needs of the company such as preparation of contract documents, procurement of insurance cover, and contracting affordable debt for the company.
The following are some of the most frequently used LLC officer titles and their usual responsibilities:
- Chief Executive Officer (CEO): CEOs sit right at the top of an organization’s staff hierarchy. They formulate strategies and direct the operations of the organization. However, one of their key objectives is to increase company profits.
- President: The main function of presidents is to make the key decisions to direct company operations. Presidents monitor the everyday work and make the ultimate and key company decisions.
- Vice President: The work of the vice president is to supervise the work done by the company employees. Vice presidents also take part in the company’s everyday work processes.
- Secretary: Secretaries have a key role in making records of all official information and documents and taking care of the repetitive company communication work.
- Assistant Secretary: Similar to a secretary, the assistant secretary takes care of everyday company communication processes and also handles some of the administrative work.
- Manager: The work of the manager is to employ personnel and supervise everyday work operations for the company. They are also involved in decision-making for the running of the company.
Other Examples Of LLC Titles You May Include In Your Business Include:
- Chief Financial Officer: The Chief Financial Officer takes care of the company finances. He/she oversees the use of the kitty on short-term and long-term company expenses.
- Principal: The title of an LLC principal is reserved for the member with the greatest ownership share of the LLC.
- Registered Agent: A registered agent is an individual nominated by the LLC to accept service of process in place of the LLC. They are expected to receive service of process, legal paperwork, and communication documents in place of the company. A registered agent may be a law firm, an agency, or a lawyer.
- Board of Directors: Usually, the board of directors refers to several directors elected by the company’s shareholders and supervise the operations of the company. LLCs do not need to have a board of directors but may opt to have a comparable management model in their operating agreement.
Consultant: A consultant is often a professional contracted to work on a company project. The consultant may be a lawyer, accountant, or marketer.
What Are The Type Of LLC Titles to Avoid In Your Company?
One of the main functions of an LLC title is to distinctly demarcate the responsibilities of every employee in the company. However, some titles should be completely avoided; they include:
- Managing Partner/General Partner: Assigning titles with the name “partner” will give the business organization the impression of a partnership and not an LLC.
- (Sole) Proprietor: Just like the previous title, a sole proprietorship will make the business look like a sole proprietorship and not an LLC.
- Humorous Titles: Hilarious titles like “Chief Exciting Officer” and others may greatly undermine your business’ credibility in the eye of the customer.
What Are The Benefits And Drawbacks Of LLC Job Titles?
Using LLC titles has both benefits and drawbacks for your company. Titles make it easy for employees to remember and master their company responsibilities better. Also, having extra job titles apart from “members” will improve the execution of business operations, particularly the firm’s interactions with customers.
At the same time, you have to clearly define the responsibilities for each title to avoid causing chaos and confusion at work and with your clients.
What Is The Best Way Of Choosing An LLC Title?
Most times, it can be difficult and overwhelming to settle for an LLC title that is befitting to the company and simple to understand. Below we show how you can begin a successful title evaluation process for your LLC.
Consider the position you are looking to work in. A title like “CEO” or “President” is ideal if you are the only member of your LLC. However, if the LLC has several owners or titles, it is best to evaluate your strong points and weaknesses.
Determine clear responsibilities for the title. This is a good evaluation strategy when you have numerous titles to consider.
Preserve your LLC’s operating agreement. LLCs may not be limited to bylaws and other official policies to the level of the corporation, the titles should be captured in the LLC’s internal records
Seek legal guidance: A lawyer can help you with your LLC’s operating agreement, particularly if you do not know how to create titles in your business company. The content you read online should be used for informational reasons only.