The owners of an LLC are called members. That is the title used in every state’s LLC statute, in IRS guidance, and in operating agreements, and it applies whether the company has one owner or fifty, and regardless of how much of the business each person owns.1Internal Revenue Service. Limited Liability Company (LLC) A company with one owner is a single-member LLC; a company with two or more is a multi-member LLC. The term exists to distinguish LLC owners from corporate shareholders and from partners in a traditional partnership.
The Revised Uniform Limited Liability Company Act, a model law adopted in some form by a majority of states, defines a member as a person who has been admitted to the LLC and has not formally departed from it.
What a Member Actually Owns
What a member holds is a membership interest, not stock and not shares. The distinction is more than cosmetic: the rights attached to a membership interest come from the operating agreement, not from corporate stock rules. Profits paid out to members are called distributions rather than dividends, since dividends is the term reserved for payments corporations make to shareholders.2Internal Revenue Service. Topic No. 404, Dividends and Other Corporate Distributions
Some LLCs issue membership certificates, which function similarly to stock certificates and document each member’s percentage interest. These are optional. The operating agreement is the controlling record of who holds the title of member and what each one owns.
Who Can Hold the Title
Most states place very few restrictions on who or what can be a member. The IRS notes that members may include individuals, corporations, other LLCs, and foreign entities, with no maximum number of members.1Internal Revenue Service. Limited Liability Company (LLC) Trusts and estates can hold membership interests too, which is why LLCs show up often in succession and asset-management planning.
A single LLC can have members ranging from an individual founder to a large corporation to a family trust, all under the same legal title. Because the governing rules come from state law, check your state’s LLC statute for any specific restrictions, such as whether certain licensed professions must form a different type of entity.
Member, Managing Member, or Manager
The base title is “member,” but a member’s day-to-day authority depends on how the LLC is structured. Most LLCs follow one of two models.
Member-Managed LLCs
In a member-managed LLC, every member participates in running the business. Each one has authority to sign contracts and make decisions that bind the company. When a particular member takes a lead role, that person is often called a managing member. This is the more common setup, especially for smaller companies where the owners are actively involved.
Manager-Managed LLCs
A manager-managed LLC separates ownership from operational control. The LLC designates one or more managers, who may or may not be members themselves, to run the business. Members who are not managers become passive investors: they keep their ownership interest and their right to distributions, but they have no authority to make binding business decisions. This structure is typical when outside investors contribute capital but don’t want involvement in daily operations.
The practical consequence is that banks, vendors, and landlords need to know who can legally act for the company. Only managers in a manager-managed LLC, or all members in a member-managed LLC, have that authority. The operating agreement should spell out exactly which titles carry signing power.
Can an LLC Owner Be Called CEO or President?
Yes. Unlike corporations, LLCs are not legally required to appoint officers, but members can create positions such as president, CEO, or treasurer if they want a more traditional corporate hierarchy. A managing member might use the title of president on business cards, bank accounts, and contracts while still being a “member” under the LLC statute.
If an LLC does create officer positions, the operating agreement should define each role’s authority, how officer decisions interact with member decisions, and who has final say on major issues. Corporate titles don’t replace the underlying legal title. The same person can be a member, a manager, and the CEO of the LLC at once, with each title describing a different piece of their role.
Why Tax Forms May Call You Something Else
The IRS classifies an LLC based on how many members it has and whether the LLC has elected a different tax treatment. Each classification carries its own terminology for the owners, which is why a member may see a different word on tax documents than in the operating agreement.
- Single-member LLC (default): treated as a “disregarded entity.” The IRS ignores the LLC for income tax purposes, and the member reports business income on their personal return.1Internal Revenue Service. Limited Liability Company (LLC)
- Multi-member LLC (default): treated as a partnership for federal tax purposes. Members are referred to as “partners” on tax documents like Schedule K-1.1Internal Revenue Service. Limited Liability Company (LLC)
- LLC electing corporate treatment: by filing Form 8832, an LLC can elect to be taxed as a corporation. Once that election is made, owners are treated as holding stock and are called “shareholders” for tax purposes.3Internal Revenue Service. Form 8832, Entity Classification Election
- LLC electing S-corporation treatment: an LLC that files Form 2553 to be treated as an S corporation has its owners referred to as “shareholders” in IRS documentation.4Internal Revenue Service. S Corporations
These tax labels don’t change the legal title under state law. A member who shows up as a “partner” on a Schedule K-1 is still a member for purposes of the operating agreement, state filings, and contract authority. “Member” is the state-law title; the tax label depends on the IRS classification.
Transferees and Dissociated Members: Owners Who Aren’t Members
Not everyone with a financial stake in an LLC holds the title of member. When a member transfers their ownership interest to someone else through a sale, gift, or inheritance, the recipient typically becomes a transferee, also called an assignee. A transferee gets the right to the member’s share of distributions and profit allocations, but does not automatically gain the right to vote, participate in management, or access company records. Becoming a full member usually requires approval from the existing members or compliance with a process laid out in the operating agreement.
A person who leaves the LLC, voluntarily or involuntarily, is called a dissociated member. Dissociation can be triggered by voluntary withdrawal, a departure event in the operating agreement, a vote by the other members, a court order, or events such as death, bankruptcy, or incapacity. Once dissociated, the former member loses management rights and is treated essentially like a transferee, retaining only economic rights to distributions. The operating agreement typically governs how and when the dissociated member’s interest is bought out.
Signing as a Member
Using the title correctly on contracts matters for liability. When signing on behalf of the LLC, a member should identify the company as the contracting party and sign in a representative capacity, not in their own name. A clean signature block includes the LLC’s full legal name, a “By” line, the signature, and the signer’s title underneath, such as Member, Managing Member, or Manager.
Signing without making clear that you’re acting for the LLC, for instance by using only a trade name or your personal name, can expose you to personal liability on the contract. The LLC structure exists to keep business obligations separate from personal assets, and a sloppy signature block can undo that protection.