What is the Difference Between a "Member" and a "Manager" of a Series LLC?

A limited liability company (LLC) is a great way to protect personal property while simultaneously saving on taxes. A series LLC is a multi-tier business structure, which creates a parent-child hierarchy. Typically, the parent series LLC is filed with the state. Once that has been done and the Internal Revenue Service (IRS) has provided a tax-identification number, individual “child” series LLC companies can created without additional filings or startup fees.

The Benefits of a Series LLC

A series LLC allows a business owner to protect their assets and investments separately. What does this mean? Each LLC’s assets are protected from lawsuits that may be brought against the others. Imagine you invest in four separate rental properties, each under a distinct series LLC. If a personal injury occurs on Property A and a lawsuit if unfortunately brought against you, the other three properties and any earnings and returns that correspond to them in your other series LLCs cannot be subjected to losses you may suffer. Only the series LLC attached to Property A can be subjected to the punitive damages you may be liable for.

“Member” vs “Manager”

There are two ways to structure the management of your series LLC. For a member-managed series LLC, the owner(s) run the business. For a manager-managed LLC, a designated member or non-member is responsible for the running of the business. Let us take a closer look at the differences below.

  • Member: Series LLCs can have one or more members. In its most simple form, the word member, when used in relation to a series LLC, means owner. Most often, series LLCs are formed by small businesses that do not need extensive management structures. Because of this, member-managed LLCs are the most common type of management structure used.
  • Manager: Manager-based structures are used typically when there are members who only want to act as passive investors in the business. It is also used when a business is too large or diverse for members to co-manage. Manager-managed structures are also often used when members themselves lack managerial skills and want expert outside help to ensure their business remains profitable.

Series LLCs at Royal Legal Solutions

At Royal Legal Solutions, we do our best to ensure you have the greatest possibility for success. We understand how important it is to protect your investments and limit your liabilities. If you have questions about how a series LLCs works and if they are right for you, the experts at Royal Legal Solutions can help.   

Last Updated: 
April 7, 2018

Scott Royal Smith is an asset protection attorney and long-time real estate investor. He's on a mission to help fellow investors free their time, protect their assets, and create lasting wealth.

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