You can form your own limited liability company, or LLC, without the need for any co-owners. Although this will give you sole control of the LLC, you must still organize and operate your LLC as a legal entity that is separate and distinct from your personal affairs. If you fail to do so, you run the risk of losing the benefit of having the LLC protect your personal assets from the debts and liabilities incurred in the operation of the LLC's business.
The basic management structure for an LLC is to have the owner or owners -- referred to as members -- manage all aspects of the LLC and its business operations. This is commonly referred to as a member-managed LLC. An LLC with only one member, called a single-member LLC, also can be structured this way. State LLC laws consider an LLC to be member-managed, unless provisions have been made in the LLC's organizing document or other documents to indicate otherwise.
Designating a Manager
All LLCs, including a single-member LLC, can be run by one or more manager. Although an LLC member can be a designated manager, LLC laws allow non-members to be designated as manager. Hiring a non-member manager may be a desirable organizational structure if you prefer the LLC as an investment only. For example, your LLC can own income-producing real estate, such as residential apartments or commercial property, and you can hire a professional management company to manage the day-to-day property activities.
Depending on the needs of your LLC's business operations, you also can structure the LLC management to include various offices, similar to a corporation. For example, the person responsible for overall business operations can be designated as president, with another person responsible for financial matters designated as treasurer. Additional people can be designated as vice president and given specific aspects of the business to run. In fact, Minnesota LLC law requires that every LLC have a designated chief manager and treasurer, which in the case of a single-member LLC, can be the same person.
Protecting Personal Assets from LLC Liabilities
If you choose an organizational structure for your single-member LLC that gives you sole management authority, you must take care to avoid commingling your personal affairs with LLC operations. For example, commingling can occur when you deposit checks intended for LLC services or products into your personal bank account -- even if the checks are made payable in your name. Commingling also occurs when you use LLC bank accounts to pay for personal items. This activity makes it appear that your LLC does not have an organizational structure of its own and that its activities and yours are one in the same, like a sole proprietorship. If your LLC lacks a separate identify from your personal affairs, you put yourself at risk for becoming personally liable for the LLC debts.
- Internal Revenue Service: Limited Liability Company (LLC)
- Arizona Legislature: Arizona Revised Statute 29-681. Management Of Limited Liability Company
- Minnesota Office of the Revisor of Statutes: Chapter 322B. Limited Liability Companies
- Ralph Minto, Jr., Attorney at Law: Making Sure Your LLC Truly Limits Your Liability
Joe Stone is a freelance writer in California who has been writing professionally since 2005. His articles have been published on LIVESTRONG.COM, SFgate.com and Chron.com. He also has experience in background investigations and spent almost two decades in legal practice. Stone received his law degree from Southwestern University School of Law and a Bachelor of Arts in philosophy from California State University, Los Angeles.