When forming a Limited Liability Company (LLC), understanding the specific terminology is crucial for proper governance and operations. One common question that arises is what to call the owners of an LLC. Unlike corporations with shareholders and directors, LLCs have a distinct set of terms. The most common and legally recognized term for an owner of an LLC is a 'member.' This term is widely used in state statutes and operating agreements across the United States, from Delaware to California. However, the exact designation can sometimes depend on how the LLC is managed. While 'member' is the default and most prevalent term, some LLCs are managed by individuals who are not owners, or by a subset of the owners themselves. In these cases, understanding the distinction between 'member-managed' and 'manager-managed' LLCs becomes important, as it affects how owners are referred to and their responsibilities. This guide will delve into these terms, clarify their meanings, and explain how they relate to the formation and operation of your LLC.
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