Member-managed or manager-managed: who runs the LLC, and why a bank cares

The members run the company and make decisions together, by a majority or however the agreement says. It's the default in Wyoming and Delaware when the agreement is silent, and it's how nearly every single-member LLC works: the owner manages, signs and decides. Two or three co-founders who all work in the business usually choose this, with the agreement listing the decisions that need everyone's consent.

The members appoint one or more managers, who don't have to be members, and the managers run the company. The members' role is to appoint and remove managers and to vote on the major decisions the agreement reserves for them. It suits a company with passive owners, such as an investor or a relative who holds a share but doesn't work in the business, or one where a single founder runs things with the others' agreement. It also suits a holding company run by one person for several owners.

The differences matter most with several owners. A 70/30 Delaware LLC is run by the 70% member unless the agreement says otherwise, while the same Wyoming LLC gives each member an equal say. And a Delaware member can commit the company to a contract by default. Either way, write it down in the operating agreement: the bank will ask, and a default you didn't choose is the one that applies.

Neither Wyoming nor Delaware asks for the management structure on the formation document, and neither lists managers publicly. It lives in the operating agreement, which the bank reads to see who can open the account and sign. A manager who isn't a member is still identified to the bank as a person who controls the company, even without owning a share.

Amend the operating agreement with the members' consent, as the agreement requires, and tell the bank. A member-managed company often switches to manager-managed when it takes on an investor, with the founder as manager.