This is one of the trickiest questions we get. When you form your LLC or PLLC, you need to tell the Arizona Corporate Commission how that entity is going to be managed.
As with any company at least one person has to be in charge of managing the day to day business. Unless you appoint one or more members or non-members to manage your LLC, you and all the other members are automatically responsible for managing the business. This is called “member managed.”
Owners of an LLC (known as members) jointly manage the LLC although they can instead designate one or more managers to manage the LLC if they want to impose a separate level of management. This is called "manager-managed."
Although we were personally advised that being a member meant you wouldn't be held personally liable for the debts of the LLC, it turns out that this is not 100% true. According to a leading LLC attorney in Phoenix, choosing to be a member over a manager does not mean you have less liability if say, you run a red light and hurt someone in a car crash. Regardless of whether you are a manager or a member, you still may get sued and the LLC isn't going to protect you.
Manager-managed LLCs might be appropriate if you have passive investors who will feel more comfortable if the LLC appoints an active managing member (or perhaps several managing members) whose duties are explicitly defined.
In that same vein, as a single member LLC or PLLC you are, obviously, going to be the one managing the business and running "the company." Making management decisions inherently creates liability for you regardless of whether you are a member or manager.
For single owner LLCs and PLLCs, I lean towards member managed. According to NOLO's Quick LLC (Mancuso) 95% of small businesses choose member managed.
* Remember, we do not dispense legal or tax advise. You can find information on the subject of management styles from plenty of websites. Or, you could consult a legal professional for, well, legal advice.
