What is an LLC Managing Partner? (What You Should Know)
An LLC can be run by members or a manager. Your LLC's operating agreement will define exactly what a managing partner can and cannot do.
With the collaboration of our LLC experts with over ten years of experience and some researchers, we have properly detailed everything about an LLC managing partner. This ranges from its definition to the functions the managing partner can perform.
Quick Summary
- An LLC managing partner is a person who has been given the mandate of managing the affairs of the business.
- Limited liability companies with more than one owner are eligible to hire an LLC managing partner.
- Companies that hire LLC managing partners are saved from the hassle of overseeing the day-to-day operations of the business.
What is an LLC Managing Partner?
An LLC managing partner is an individual, group of people, or legal entity that was authorized by the members to manage and run the affairs of the company. A managing partner may or may not be a member of the entity.
An LLC can hire more than a single LLC managing partner, depending on the complexity, size, and needs of the company.
Manager VS Member-Managed LLC
The managing member will depend on whether your LLC is Member-Managed or Manager-Managed [1].
If you are an LLC member of a multiple-owned LLC, then the individual who holds this position will be referred to as a "Managing Member."
Those who manage an LLC owned wholly by one person are called the "Managing Partners."
Another way to determine if you have a Manager or an Operating Member is by looking at what the Operating Agreement of your LLC states.
Generally speaking, a manager will have a little more flexibility when it comes to tax management.
Managing Partner Management Duties
The management duties of the Managing Partner include all fundamental aspects of the limited liability company.
The responsibilities cover but are not limited to the following areas:
- Policy Making: Set policies and procedures as well as implement the regulations for the LLC.
- Business planning: Formulate objectives, strategies, and methods for the success of the business.
- Financial Management: Oversee financial affairs, budget, taxes, accounting, and records.
- Legal Issues: Must ensure the company follows federal and state laws and regulations.
- Managing Employees: Responsible for hiring, training, evaluating, firing, and paying employees.
- Business Relations: Directly deals with clients and other business entities on behalf of the LLC.
Managing Partner Authority
A Managing Partner has the authority to decide what LLC taxes are filed and if any estimated tax payments are due.
The managing partner may also be authorized to act on behalf of the company for many different purposes, such as signing contracts, opening new LLC bank accounts, etc.
In most cases, a manager or an operating member cannot send out legal documents to members unless all the managers and managing members sign them.
This is because contracts must have signatures from both an individual and a representative on behalf of their company, which they can do if they are an individual operating member or the managing partner. This is meant to ensure that all managers and members can be held accountable.
If you are using an accountant or another financial expert, then your managing partner should know when and how to communicate with these people about the taxes on your LLC.
Managing Partner Liability
The managing partner is the representative of the limited liability company and is involved in day-to-day business transactions. Since they have the authority to enter into contracts, sign documents, and conduct business on behalf of the company, they are more vulnerable to legal liabilities.
In some cases, managing partners may find themselves liable for tax debts if they have been negligent about filing taxes. The managing partner can help streamline the company's corporate structure by filing necessary forms with the state to maintain limited liability status.
Reasons to Choose Manager-Managed LLCs
The main reason one might choose to set up a manager-managed LLC is that the managers are responsible for all day-to-day operations.
This means that LLC members don't need to deal with business matters on a day-to-day basis, allowing them more free time to focus on other parts of their personal lives.
Any of the managers can be designated as a Managing Partner to help ensure that all taxes are filed on time, which is very important when maintaining your LLC's limited liability status.
Related Articles:
- How to Form a Single-Member LLC
- Who Can Be a Member of an LLC
- How to Set Up an LLC
- What's the Difference Between LLC and Partnership
FAQs
Is the Managing Partner the Same as an Owner?
In most instances, the managing partners are part owners of the business. However, there are exceptions where some managing partners are not owners. It applies to both a manager-managed LLC and a member-managed LLC.
What Decision-Making Authority Does an LLC Managing Partner Have?
The decision-making authority of an LLC managing partner is typically defined in the operating agreement. While managing members often have broad decision-making powers, the specific extent of authority granted to a managing partner is outlined in the agreement established by the LLC.
The Management of an LLC
An LLC managing partner, also referred to as a 'managing member,' is an individual or managing entity that has the authority to act and conduct business on behalf of the company.
They are mainly responsible for day-to-day operations, business decisions, finances, legal matters, and employee management.
A limited liability company can opt for a member-managed or manager-managed LLC based on the structure, magnitude, and nature of the business.
References:
- https://www.northwestregisteredagent.com/llc/member-managed
