What is the difference between an LLC member and manager?

An LLC member is an owner who holds a financial interest in the company, while a manager is the person or entity authorized to make day-to-day business decisions. In a member-managed LLC, all owners participate in management. In a manager-managed LLC, designated managers (who may or may not be members) handle operations while other members are passive investors.

Member-managed LLCs (default in most states): every member has equal authority to sign contracts, make purchases, and bind the LLC. Best for small businesses where all owners are actively involved. Manager-managed LLCs: only designated managers have authority to act on behalf of the LLC. Best for businesses with passive investors, multiple members where not all want operational involvement, or when you want to hire a non-owner professional manager. Your operating agreement should clearly specify which structure you use, as it affects who can sign contracts, open bank accounts, and make binding commitments on behalf of the LLC.