Does an LLC need to have a president or CEO?

Limited liability companies (LLCs) aren't required to have a president or CEO, but it might be a good idea. As with most issues concerning the law, the "right" answer depends on the circumstances.

LLC leadership

Although state laws vary concerning LLC formation, generally, LLC owners—also called members—may choose the type of leadership structure they wish to employ for the business. Your LLC isn't required by law to have a board of directors and named officers such as a president and treasurer.

If you have a single-member LLC, which means that you are the only member, you can choose any title you like to signify that you are in charge. You can name yourself the CEO and/or president, principal, managing partner, director of operations, or a similar term.

Good practice is to choose a name that reflects the image you want to portray for the LLC. You may use the title while signing contracts and otherwise conducting official business on behalf of the LLC.

For a multi-member LLC, you may decide that the business should have one specific person responsible for managerial decisions. This choice may make sense for a variety of reasons. Perhaps one member primarily runs the business, while others are silent members who have invested money in the venture. No matter the reason behind the decision, you may choose to name one member as president or CEO.

A president or CEO may have various duties, from making the final calls on tough business decisions to providing a larger, overall strategy for pushing forward the business' goals. Notably, a president or CEO does not have to be the one in charge of daily operations, and, in fact, many such leaders do not want to be. For this reason, if you are president or CEO, you may hire managers who take care of such tasks. These managers may even be given the title of vice president.

The importance of the operating agreement

If you decide on one leader, regardless of the organizational structure and titles you choose, your LLC's operating agreement should include all information related to any member designations.

All states permit LLCs to establish a CEO or president position so long as you create the office and define it in the operating agreement. The state must know who has the authority to sign official and legal documents on behalf of the LLC.

Aside from state filing requirements, though, it is a good idea to have individual members' duties and responsibilities outlined in your operating agreement. In addition to president or CEO, you may also choose to name other positions, such as treasurer, financial manager, or budget director.

Establishing this type of clarity in the business structure is smart to ensure that everyone knows and understands their roles and the expectations other members have of them.

If you're forming an LLC, deciding on the management structure is one of the most important decisions you can make. If you want to have someone in charge of the final say on important decisions, having a specifically named CEO or president is probably a good idea.