We intend to start a member managed LLC, all of us will manage the company. Do we still necessarily need to designate officers like President. Secretary etc? 2. Self-Employment Tax is a very fuzzy issue! I understand that you have to pay Self Employ Tax under these circumstances: a. If a member works for more than 500 hours b. If a member has authority to sign or bind LLC in contract? etc etc. Now one of the members will any ways have to sign the legal contrats etc, Does that mean that atleast that member will have to pay self employment taxes?
Great question. Remember the KISS principle? Keep It Simple & Stupid..... if you have a member managed LLC why complicate it? However, if you really decide to use additional titles..... It is probably unlikely that you need to designate officers but many people find it helpful because clients, customers, bankers and others are use to dealing with "President" and other such positions. Titles like "Manager" leave a much different impression. The issue is that those are really corporate titles, not LLC concepts. So if you decide to use these titles you have to structure the legal documentation in a manner that works under your state's LLC statute (get a corporate/business attorney to help!). In some states the following concepts/steps might help: o Consider amending your Certificate of Formation or Articles of Formation to include the concept. o Have the Managers called directors and have the officer report to the directors. In your case, you have members as managers so this changes your structure. This creates a line of authority similar to a corporate format, but in the context of an LLC. o Amend your LLC Operating Agreement to include detailed definitions of the rights and powers of each office since the LLC statute in your state is unlikely to provide definitions. Caution: In many cases the above structure could undermine your planning objectives. For example, in family estate planning a member managed LLC is preferable in many instances to having a senior family member in a manager or control position.
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