Law & Taxation mentor Barbara Weltman responds to the following question from an inc.com user: What roles do the members of an LLC play? Are they shareholders of the company?
Barbara Weltman responds: Members of a limited liability company (LLC) can have different roles, but they are owners of the business and have ownership interests in it. They are not referred to as shareholders because only corporations have shareholders.
Whether LLC members participate in the day-to-day management of the business depends on the LLC's Articles of Organization or the operating agreement. Some LLCs may restrict management to "managers," leaving other members as investors. Other LLCs let all members contribute to the daily operations of the business. Consult a lawyer or tax adviser to receive more details on LLCs and how one might work for your particular business.
BARBARA WELTMAN is an attorney and a trusted professional advocate for small businesses and entrepreneurs. She is the author with such titles as J.K. Lasser’s Small Business Taxes and Smooth Failing, and she contributes regularly to American Express OPEN and SBA.gov. Her articles have appeared in the Wall Street Journal and U.S. News and World Report. Weltman is also the publisher of Idea of the Day and monthly e-newsletter Big Ideas for Small Business at www.barbaraweltman.com and hosts radio shows and podcasts, including Build Your Business radio. She has been named one of the 100 Small Business Influencers in the U.S. for the third year in a row. @barbaraweltman