What is the difference between Member-Managed and Manager-Managed LLCs?

Both options have pros and cons. Choosing what is best for your business will depend on its size and long-term goals. With a member-managed LLC the members (i.e., owners) share in the decision-making process and take an active role in the day-to-day operations. This is ideal for small or mid-size businesses that do not require a larger, separate management system like a board of directors to operate. This is the default management structure for an LLC in Pennsylvania. A manager-managed LLC is where the member(s) (i.e., owner(s)) of the company delegate operational control to a designated person(s) (i.e., manager(s)) to run the company. This can be done by hiring an outside manager or by selecting one or more of the members of the company to be managers. With this structure, the manager(s) will handle day-to-day business decisions. This is ideal when one or more members within a business want to take on a more passive investor role in the company.