One of the questions that arise when forming an LLC is if the LLC should be member-managed or manager-managed. While it is a fairly simple process to form an LLC in Colorado, choosing between member-managed or manager-managed is where many business people get confused.
What is the difference?
The owners of an LLC are called “members.” An LLC can either be member-managed or manager-managed. In a nutshell, this means that either all of the owners of the LLC can be actively involved in the day-to-day business operations (member-managed). Or that some of the owners can be investors only and not have any management responsibilities (manager-managed).
What does this mean?
A member-managed LLC is most common between the two. This happens when all of the members are going to actively participate in the management and operations of the business. Also happens in the case of a single-member LLC.
Member managed differs in management involvement . If you and one partner want to be involved in the management and the smaller decisions that affect the LLC on a daily basis, then member-managed is best. Almost all single-member LLCs will be member-managed, at least in the beginning.
Learn more about how to form an LLC in Colorado.