Member managed v. manager managed LLC - there’s a big difference

When registering an LLC, the state might ask you whether it's going to be manager-managed or member-managed. By the way, a member is the same thing as an owner. So in a member-managed LLC, that means that the LLC is going to be managed by one or more of the owners. This means that the owner or owners are going to have authority to sign on behalf of the LLC and handle day-to-day operations. However, sometimes the owners of the LLC don't really want to be that involved in the LLC, and they kind of just want to be passive investors. So in that situation, they're going to want to start a manager-managed LLC. In a manager-managed LLC, the members basically get together and choose a manager to handle the day-to-day operations of the LLC, and they will give that manager authority to act on behalf of the business and sign documents. The manager can be one of the owners of the LLC, or it can be an outside third-party person that is paid to act as the manager of the LLC. Usually people start member-managed LLCs because the owners are the people that are managing and growing the business, but sometimes they'll choose to hire someone to do this for them, in which case you're going to start a member-managed LLC.