LLC Management Structure

The video tutorial explains the management structure of an LLC, highlighting two main options: a partnership-like structure where all members have equal authority, and a managed structure where professional managers, who may also be members, control operations. The choice of structure affects decision-making, member compensation, and taxation.

What are the two main management structures available for an LLC?

• Partnership-like and Managed

• Hierarchical and Flat

• Centralized and Decentralized

• Corporate and Cooperative

In a partnership-like LLC structure, what is the default rule regarding decision-making authority?

• Equal rights among all members

• Authority is given to the largest investor

• Decisions are made by a board of directors

• Authority is based on seniority

How can the operating agreement affect the management structure of an LLC?

• It can reduce the LLC's tax obligations

• It can change the default allocation of authority

• It can eliminate the need for managers

• It can increase the number of members

What role do professional managers play in a managed LLC structure?

• They are responsible for marketing

• They oversee legal compliance

• They only manage financial accounts

• They handle day-to-day operations

What is a potential impact of having a managed LLC structure?

• Equal compensation for all members

• Different compensation and taxation for passive and active members

• Simplified tax reporting for all members

• Increased member involvement in daily operations