Let’s talk about Management of your business for a minute. After all, that is what really matters once the business is put together. How will it be run? This decision affects you in a very special way.
This is the one part of our discussion where the C and S distinctions are irrelevant.
Corporations are Restricted by Regulations. Corporations must have a Board of Directors. They must meet at least annually.
We all know about Boards of Directors. What kind of mess they can be. An absent group of people who make decisions affecting the day-to-day operations of a business they are not really involved in except for the monthly or quarterly meetings they attend.
The board delegates authority to someone (typically a CEO) who has day-to-day authority, but must still report back to the board. This can create hurdles in decision-making and, if the owners also choose to serve on the board, a number of issues in a group of professionals attempting to tell the business people how to run the business.
Though the law is quite clear what decisions that are to made by the Board of Directors (day-to-day business decisions) and the Shareholders (decisions regarding the asset that is the business) this is an often confused part of having a corporation.
This type of management structure can lead to staff members or administrators struggling with their role in properly running the business. This type of government creates the “red tape” we all know and love so much in larger organizations.
Limited Liability Companies
LLCs on the other hand are more contractual by nature and can be adjusted according to the needs of the business. If you want, you can make it look just like a Corporation with a Board of Managers etc. Here is a very important special feature of the LLC. LLCs can be either MEMBER MANAGED OR MANAGER MANAGED. If it is Manager Managed, much of the day to day management is given over to managers (like you).
On top of this flexibility, the LLC can be simply managed by its members, which eliminates the confusion in maintaining two sets of records (one for the board and one for the shareholders) and determining which set of people is supposed to make which decision. Being managed by members who operate the business can be helpful as decisions can happen in real time. However, a properly set up management relationship can give a manager (like you) a lot of flexibility and power in the everyday affairs of the business.
With a manager managed LLC, you can give as much (or as little) authority as you want to an individual manager or a group of managers of the board. That means, if you are working to help the owners set everything up, you can set up your leadership style within your staff and the governance in a way that works best for you. This can also be true for your projects. The LLC may allow you to set up a leadership style in a way the works best for your business.