Does an LLC Have to Have a President or CEO?
The U.S. Small Business Association reports that small businesses account for nearly 44 percent of the non-government payroll in the United States. Most entrepreneurs start their companies as a sole proprietorship or general partnership. As they grow or when they add employees, they often choose to organize or incorporate to protect assets and establish business credit. When owners found an LLC, they must decide on a suitable title.
All owners of a limited liability company are called members. An owner's stake in an LLC is referred to as a membership interest. LLCs are governed by operating agreements controlled by the laws of the state in which the LLC was formed. With a single-member LLC, the sole member can call herself president, CEO or another title she prefers. A multiple-member LLC needs a more clearly structured operating agreement or other written agreement that defines the roles and responsibilities of whoever leads the company.
"Managing member" is the legal term for the person who leads an LLC. The operating agreement imbues this person with the authority to act on the LLC's behalf. The managing member can sign agreements and run the business' daily operations. The managing member of an LLC is equivalent to a president or CEO of a corporation. You can use the designation "managing member" as your actual title, but you do not have to.
If you run a single-member LLC, you can choose the title you prefer. It can be president or CEO, but that is not a requirement. You can choose a title that reflects ownership, such as principal, partner or managing member. Alternatively, you can choose a title that reflects your actual area of focus, such as vice president of sales or director of technology. You can make the same choices in a multiple-member LLC as long as all other members agree on the title designation.
Although you do not have to use the terms president or CEO, you must designate someone with clear authority to sign on behalf of the LLC and commit the LLC to contractual or financial obligations. The operating agreement, or another document fully executed by all LLC members, must reflect who has that authority and what title has been given to the person in the managing member role. This agreement also ensures that documents you sign on the company's behalf reflect the title in which you, or whoever leads the LLC, are authorized to sign.