AZ LLC Question:

When first starting an LLC in AZ is it better to list yourself as a Member or Manger? The reason why I ask is because I want to limit my risk as an LLC owner
In Buying Property - Asked by David A. - Dec 17, 2009
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Answer(s)

Alan Y.
Property/Asset Manager
Woodland Hills, CA

Managing Member. Your risk is limited by virtue of the entity being an LLC.

Dec 18, 2009
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Bradley L.
Owner/Investor
West Linn, OR

I believe the answer has to do with whether or not you have partners/other LLC Members.
If you are the sole member, then my understanding is that the LLC is limiting your risk the same whether you are listed as a Member or a Manager.
You have a choice as to whether the LLC Operating Agreement defines your LLC as being "Member Managed" or "Manager Managed".
For simplicity, most professionals I have worked with have suggested "Member Managed". That means you are a Member, but since you are also the only Member, and in charge, you are the Manager as well. But I believe you can actually do it either way.
If you have other Members in your LLC, then the decision also may have to do with your estimate of whether or not you think you would get sued by other Members if the deal goes bad.
If you have other Members and really want to limit your liability, you may be better off having another Member listed as Manager, and you as just a Member, but this could limit your amount of control of the LLC.
In addition, you can structure voting and equity participation in an LLC separately, which potentially gives you more tools to limit your risk and retain at least some control.
No matter what, if you are single Member or have other Members, and you use funds from anywhere but your own cash, you still have the possiblity of getting sued if the deal goes bad.
If you are found to have acted in bad faith, or not disclosed essential elements to those prividing funding, you may be found liable for some amount.
Even in an LLC, if you get cash from other sources, document your full disclosure in writing of the potential deal, and all the risks, to those providing funds, and don't guarantee any returns, and you will be about as safe as you can be.

Dec 19, 2009
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Darren A.
Broker/Agent
San Juan Capistrano, CA

Les is correct- you want to be the managing member. Advice to stay protected: minute your meetings and pay annual fees.

Jan 1, 2010
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David A.
Owner/Investor
Tempe, AZ

Great thank you for the info. The main reason I asked the question is because I do have a partner but I was interested in making us both Members (non managers) if that would limit the overall risk (if we were sued) because technically we would not have a responsible manager?

Jan 4, 2010
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