To change from a manager-managed to a member-managed LLC, you will need to amend your articles of organization. Here’s what you need to know.
What is the difference between a member-managed LLC and a manager-managed LLC?
In a member-managed LLC, all LLC members (owners) are involved in running the business. In contrast, in a manager-managed LLC, the LLC members hire managers to run the business for them. The people who manage your LLC make day-to-day decisions about your business, including hiring employees, signing contracts, and opening a business bank account.
Can I change my LLC structure from manager-managed to member-managed?
Yes. If you want to change the management structure of your LLC from manager-managed to member-managed (or vice versa), you should consult your operating agreement and follow your company policy for making this change. Different LLCs will have different policies, but usually, you will need to do the following to change your management structure:
- Hold a meeting
- Propose changing the management structure from manager-managed to member-managed
- Cast member votes
- Adopt a resolution (with majority approval)
- File an article of amendment with the state
How do I amend my articles of organization?
To amend your LLC articles of organization, you must file an article of amendment with your secretary of state (or equivalent state agency). An article of amendment is a document submitted to the state to change information on a business’s formation documents (usually called Articles of Organization for LLCs). Each state has a somewhat different process for filing amendments, and most states charge a filing fee.
Find out more about How to File Articles of Amendment.
Do I need to update my LLC operating agreement?
Yes. In addition to amending your articles of organization, you will also need to amend your LLC operating agreement to reflect that your LLC has changed from manager-managed to member-managed. Since your operating agreement is an internal document, you should follow your operating agreement’s policy for how it can be amended.