Does an LLC Need a Board of Directors? Legal Requirements & Alternatives

Choosing the right business entity is key when launching a new company. Selecting a limited liability corporation (LLC) model provides personal liability and tax benefits. But what about ownership control? Does an LLC need a board of directors? This article will answer that question and provide alternative solutions. Some key takeaways:

• LLCs are not legally required to have a board of directors.
• Owners and managers of an LLC are called members.
• Limited liability companies are not restricted by the rules and regulations that govern other corporate structures.

Does an LLC Need a Board of Directors?

Unlike other corporate entities, LLCs are not legally required to have a board of directors.¹ They’re designed to provide business owners with management flexibility and personal liability protection. Many states allow them to be run by a single individual. That person and any other investors or owners are known as members.

The LLC’s operating agreement outlines its governance structure. These agreements allow LLC members the flexibility to choose their decision-making processes. Other corporate entities have a more rigid structure that mandates board oversight of financial and business decisions. That’s not ideal for startups and small companies that need to adapt quickly.

Can an LLC Choose to Have a Board of Directors?

Some LLCs function better when a board of directors is formed. An example is a company started by former competitors or family members. The board can act as a buffer when competing philosophies clash or discussions get too personal. The US Chamber of Commerce can provide guidelines on structuring a board of directors.² Those include:

• The board's composition and size
• Director qualifications and selection process
• Term limits and removal procedures
• Meeting frequency and voting requirements
• Specific powers granted to the board
• Relationship between the board and LLC members/managers

Flexibility is the key element in this process. As an LLC, you’re not limited by the rules and regulations that govern other corporate structures. That malleability allows companies to adopt governance models that best suit their operational needs and growth objectives.

When Might an LLC Need a Board of Directors?

There are several scenarios where a board of directors may be beneficial. We’ve already mentioned family businesses and competing partners. Other factors are the complexity and scale of operations. Growth and scale may dictate the formation of a board or a conversion to a different corporate structure. Here are some specific examples:

Large LLCs with Multiple Investors

You don’t need to be family members or competitors to have differing opinions. The larger the group, the more likely you’ll need a board of directors to make decisions. According to the IRS, LLC members could include individuals and corporations. It could also include other LLCs, and foreign entities³.
Managing that mix without a board of directors would be extremely difficult.

LLCs Operating Like Corporations

This is a common scenario for startup tech companies. They usually launch as limited liability companies with corporate-like structures suitable for C-Corp conversion. That makes it easier to attract investors when they do a pre-seed or seed funding round. It also helps ensure unified decision-making as the company goes through the transition.

Complex Business Operations

Limited liability companies with complex or multi-faceted operations can benefit from the expertise a diverse board can provide. Examples are businesses that develop new technology or operate across international borders. Appointing specialists in these areas as board members brings valuable knowledge and resources into the fold.

How is an LLC Governed Without a Board?

Most LLCs are governed by a single member or managing members, not a board of directors. This doesn’t change the pass-through tax protections provided to members. It streamlines decision-making and offers more flexibility for growth. Two common models are:

1. Member-managed LLCs: All members are involved in the company's day-to-day operations and decision-making. This works best with single-member LLCs and businesses with fewer people involved.

2. Manager-managed LLCs: Members appoint designated managers to handle operational decisions. These managers don’t need to be members of the LLC. They could be impartial parties appointed for their specific skill set.

Roles of LLC Members in Decision-Making

The LLC operating agreement dictates how member votes are allocated. It also decides voting thresholds, and meeting requirements. It can also identify specific decisions that require membership approval. This is usually regardless of management structure. For instance, some actions might only require a majority, while others need unanimous approval from all members.

State Laws Regarding LLC Management

Limited liability companies are governed by the states, not the federal government or the Internal Revenue Service. Some states default to member management if managers are not appointed. Others have specific filing requirements or mandated voting thresholds for fundamental changes. Contact your local Secreatry of State’s Office to learn more.

Discover Wise: The Financial Solution for Growing LLCs

Whether your LLC is member-managed, manager-managed, or operates with a board of directors, Wise provides the financial tools to support your business structure and goals. Those include, but are not limited to, the following:

• No monthly fees, saving your business unnecessary expenses
• International payments at the mid-market rate, ideal for LLCs with global operations
• Seamless connection to popular accounting software for simplified bookkeeping
• Multi-currency account management in one place, perfect for LLCs engaged in international business
• Local account details in major currencies to receive payments like a domestic business
• Capability to hold over 40+ currencies, giving your LLC maximum financial flexibility

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	Editor & Business Expert:
	Panna is an expert in US business finance, covering topics from invoicing to international expansion. She creates guides and reviews to help businesses save time and make informed decisions. You can read more useful business articles on her author profile.

	Author:
	Kevin D. Flynn is a retired financial professional, business coach, and financial writer. He lives in Leominster, Massachusetts with his wife Evelyn, two cats, and ten wonderful grandchildren. When he’s not working, you’ll find him at the golf course or on his back porch reading classic sci-fi novels.

Resources:

1. rocketlawyer.com
2. uschamber
3. irs.gov/businesses
   All sources checked June 2025.