Authorized Member (AMBR) Meaning LLC (What Is It?)

Jon Morgan
Published by Jon Morgan | Co-Founder & Chief Editor
Last updated: April 23, 2024
Methodology
We meticulously research and verify the information presented in our articles. By consulting reliable sources and ensuring factual accuracy, we are committed to providing readers with well-informed, trustworthy content.

An authorized LLC member is an individual(s) with the authority to make legally binding commitments on behalf of the company. This role can be filled by you as the owner, or designated to a manager, depending on the company's structure.

Not all states mandate a specifically authorized member to represent an LLC; in some cases, the owner or manager may automatically assume this role.

As a business consultant with extensive experience in assisting entrepreneurs with their LLC formations, I will provide insights into the significance of incorporating an Authorized Member for Business Representation (AMBR) within your company.

But how does the presence of an AMBR impact your business operations and legal standing, and what could be the potential risks of not clearly designating this authority?

Let’s explore these critical questions.

Quick Summary

  • An authorized Member (AMBR) in an LLC is a person authorized to file and execute documents with the office of the LLC.
  • The AMBR designation is important for LLC owners to understand as it determines whether the LLC is manager-managed or member-managed.
  • As of February 2024, according to the U.S. Census Bureau, there were 436,358 business applications in the United States, indicating a vibrant yet competitive landscape for LLC formation and management.
  • Personally, I think that the evolving role and legal framework surrounding AMBRs underscore the importance of thorough documentation and clarity in LLC management structures.


What is an AMBR Meaning LLC?

A businesswoman in formal attire holding a large file of documents

An Authorized Member (AMBR) is a person who is authorized to file and execute documents with the office of an LLC.

Three people hold this power: an LLC, an Authorized Representative or AR, an Authorized Person or AP, and an AMBR.

A representative is a person who has been granted permission by the office to execute and file records for the business.

In a multi-member LLC where all members don't have the authority to manage or run it, it will be known as a manager-managed company.

In this type of LLC, the members elect who will run the firm and are called managers. The latter can execute records on behalf of the business.

The phrase AMBR, meaning LLC, is important for an LLC business owner to understand, as they will need to know if their firm has been designated as manager-managed or member-managed.

This information must be documented in the operating agreement and articles of the organization.

AMBR Variations Across States

The roles of AMBRs vary across states and here's how.

California vs. New York

In California, the role of an AMBR is defined within the operating agreement of the LLC, something I learned firsthand when setting up my client's business there.

California law requires that any actions taken by the AMBR be in the best interest of the company, with a strong emphasis on fiduciary duties.

New York, on the other hand, has a more flexible approach, allowing LLCs to define the scope of an AMBR's authority more broadly in their operating agreement. This flexibility can lead to a wider range of responsibilities for AMBRs in New York LLCs.

Texas vs. Florida

Having operated an LLC in Texas, I can attest to the state's stringent requirements for documenting roles and responsibilities, including those of AMBRs. The state mandates detailed record-keeping and formalities in the designation of an AMBR.

Florida's approach is somewhat less formal, with a focus on the protection of members' personal assets. However, Florida also emphasizes the need for a clear designation of managerial authority, which directly impacts the role of an AMBR.

"Under the previous Florida LLC Act, an AMBR is synonymous with a Managing Member, embodying both the ownership and managerial aspects of the LLC."
- Delina Yasmeh, J.D./Tax LL.M, Distinguished Expert in Mergers & Acquisitions

Illinois vs. Delaware

Illinois requires that any LLC operating in the state have a clearly defined management structure, whether member-managed or manager-managed, which affects the role of AMBRs.

Delaware, known for its business-friendly laws, offers significant flexibility in how LLCs can structure the role of AMBRs, often making it a preferred state for forming an LLC. Delaware's legal framework allows for the creation of custom roles within the LLC, catering to the specific needs of the business.

As of February 2024, per U.S. Census Bureau statistics, the United States saw a total of 436,358 business applications, reflecting a decrease of 2.7% compared to January 2024, highlighting a dynamic environment for LLC formation that varies from state to state [1].

Types of Business Structure That an Authorized Member Carries

Several business structures fit under the Limited Liability Company umbrella, such as:

The legal documents or requirements for each business will vary in most states and depend largely on whether you choose a member- or manager-managed structure.

A member should consider these before they file records, such as the LLC operating agreement. It applies to the operating agreements of active member-managed LLCs as well.

Passive Members of an LLC

Authorized Members Ambr of an LLC giving a thumbs up

In my experience with a client's LLC, which included passive members, I saw firsthand how their role played out. These passive members, some of whom were investors, were not involved in daily decisions.

They are not authorized, especially in a member-managed structure. This means that the person who purchases a limited partnership interest will become a passive member and will have no say in how the LLC itself operates.

The other type of interest, a General Partnership Interest, will give the passive member full authority to participate in the day-to-day operations of the business entity.

An LLC management structure helps make running small businesses more effective and easier. It applies whether it's manager- or member-managed.

LLC Managers

The manager of an LLC can be a member or an outside party hired to perform the day-to-day functions of managing the LLC, which are outlined in the operating agreement.

Typical day-to-day responsibilities:

  • Hire and manage LLC employees
  • Attain financing
  • Dispose of assets owned by the company
  • Buy and sell property
  • Open and close LLC bank accounts
  • Make legal and binding decisions for the LLC

LLC managers are not liable for fraudulent statements for the LLC or actions taken by any members of the LLC.

Size of The LLC

Group of people in an office talking about AMBR

If your LLC has a single member, it will have sole proprietorship status. This means you’re the only representative liable for business debt, legal issues, etc.

A large LLC tends to have fewer individuals because the business management structure becomes more complex with more individuals involved [2].

For example, if you have 100+ employees, let members elect several managers to ensure things are running smoothly. Having this structure results in less liability for any representative in the LLC.

According to the SBA statistics, 61.6 million small business employees represent 45.9% of US employees, demonstrating the substantial role small businesses, including LLCs, play in the national economy [3].

Members of an LLC are not employees of the firm but business entity owners.

Suppose authorized members are assigned management duties for a Professional Limited Liability Company. In that case, they will be treated as workers, and their management salary will be considered distinct from their owner share and status.

FAQs

Is an AMBR of an LLC an Owner?

An AMBR of an LLC is not an owner. While the AMBR holds decision-making power and fiduciary duties, ownership interests in an LLC are typically held by its members.

An AMBR is a crucial role responsible for managing the company's operations, but it does not necessarily confer ownership.

What is an Authorized Person LLC?

An authorized person LLC is a business structure used to maintain company capital accounts. An authorized representative can perform several duties, including opening a business bank account. They can also execute and file records.

Can an LLC Have Multiple Authorized Members (AMBRs)?

An LLC can have multiple Authorized Members (AMBRs). The ability to have multiple AMBRs is typically determined by the LLC's articles of organization and the state's laws where it is registered. It is important to review the specific requirements and regulations for each jurisdiction.

Can an Authorized Member (AMBR) Be a Non-professional Individual in a Professional LLC?

An authorized member may not be a non-professional individual in a professional LLC. They hold a professional license or meet specific qualifications for a professional LLC. The members should also meet the requirements set by the relevant governing bodies.


References:

  1. https://www.census.gov/econ/bfs/current/index.html
  2. https://dor.wa.gov/open-business/choose-ownership-structure
  3. https://advocacy.sba.gov/wp-content/uploads/2023/11/2023-Small-Business-Economic-Profile-US.pdf

About The Author

Co-Founder & Chief Editor
Jon Morgan, MBA, LLM, has over ten years of experience growing startups and currently serves as CEO and Editor-in-Chief of Venture Smarter. Educated at UC Davis and Harvard, he offers deeply informed guidance. Beyond work, he enjoys spending time with family, his poodle Sophie, and learning Spanish.
Learn more about our editorial policy
Growth & Transition Advisor
LJ Viveros has 40 years of experience in founding and scaling businesses, including a significant sale to Logitech. He has led Market Solutions LLC since 1999, focusing on strategic transitions for global brands. A graduate of Saint Mary’s College in Communications, LJ is also a distinguished Matsushita Executive alumnus.
Learn more about our editorial policy

You May Also Like

2 thoughts on “Authorized Member (AMBR) Meaning LLC (What Is It?)

  1. Hey how are you I have a question I created an LLC with just me on it and I filed my self a ambr do I own my LLC or should I go and change my title to owner or CEO

    1. As the sole member of your LLC, you are indeed the owner. You can use the title “Owner” or “CEO” if it suits your needs better, especially for external interactions. There’s no need to change your title unless you prefer one that better represents your role or aligns with your business goals.

Leave a Reply

Your email address will not be published. Required fields are marked *