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<\/a><\/p>\nTable of Contents<\/strong><\/p>\n <\/a> <\/p>\n A Limited Liability Company (LLC)<\/a> is a business structure that separates personal assets from business liabilities. In other words, if an LLC is being sued or goes bankrupt, the owner\u2019s personal assets are not at risk.<\/p>\n This makes it different from other business structures<\/a> like a sole proprietorship \u2014 a business structure with one owner who is not legally distinct from his or her business (most freelancers fall into this category). It\u2019s also different from a corporation (e.g., Microsoft, Dominos), which has a different management structure and taxation scheme.<\/p>\n Within an LLC, owners are called members, and management can be structured in two ways:<\/p>\n In some cases, a managing partner (or managing member) is a member who also takes on leadership responsibilities, overseeing operations and guiding strategy. Unlike corporations, which have CEOs and boards of directors, LLCs often rely on managing members or partners to balance ownership, leadership, and daily business operations.<\/p>\n Mark Donnolo<\/a>, managing partner at business consultancy SalesGlobe, describes the role as a mix of leadership and hands-on strategy. \u201cI think of a managing partner as a first among equals,\u201d he says. \u201cIt\u2019s the person that\u2019s leading the charge strategically.\u201d<\/p>\n While many LLCs have a single managing partner, others share leadership responsibilities. For example, Beth Sherman<\/a> and Nathan Palmer<\/a>, co-founders of digital marketing firm Signify Digital, both act as managing partners, splitting management duties equally.<\/p>\n A partnership<\/a>, like an LLC, is a business structure where ownership is shared among partners. While all partners have a stake in the company, a managing partner typically takes on leadership duties, such as:<\/p>\n Some partners may be actively involved in operations, while others act as silent partners, providing capital but taking a less hands-on role.<\/p>\n <\/a> <\/p>\n I used to think managing partners and CEOs were basically the same thing \u2014 they both lead companies, right? But after diving into this, I\u2019ve discovered some key differences that really matter.<\/p>\n The Basics<\/strong>Managing partners are actually owners of their business (usually LLCs or partnerships), while CEOs are appointed by boards of directors to oversee a corporation\u2019s strategic direction. This changes everything about how they operate.<\/p>\n Power and Decision-Making<\/strong>Managing partners have real skin in the game. They own part of the business and make decisions alongside other partners. They usually report to an executive committee but have a lot of freedom in day-to-day decisions. CEOs, on the other hand, might get some stock options, but they\u2019re ultimately answering to the board about every major move they make.<\/p>\n Money and Job Security<\/strong>The pay structure really shows the difference. Managing partners live and die by the company\u2019s profits \u2014 their income is directly tied to how well the business does. CEOs typically get a salary plus performance incentives like bonuses and stock options, all decided by the board.<\/p>\n What\u2019s really interesting is what happens if things go south. A CEO can get fired by the board if they\u2019re not meeting performance goals, plain and simple. But removing a managing partner? That\u2019s way more complicated because they\u2019re an owner. You\u2019re usually looking at complex buyouts or restructuring the whole partnership agreement.<\/p>\n A 2024 report from the National Association for the Self-Employed (NASE) found that 58% of LLCs<\/a> in the U.S. operate as member-managed, meaning the owners \u2014 often including managing partners \u2014 are actively involved in daily operations. In contrast, corporate CEOs are typically hired rather than being owners themselves.<\/p>\n In some cases, a person may hold both titles \u2014 legally designated as a managing partner but operating as a CEO in daily business functions. Whether \u201cmanaging partner\u201d is purely a legal designation or an active leadership role depends on the company structure.<\/p>\n The right leadership structure depends on the company\u2019s needs. LLCs and partnerships thrive on direct ownership involvement, while corporations often prefer a separation between ownership and executive leadership. Managing partners have more job security but take on more financial risk, while CEOs have defined salaries but can be replaced at any time.<\/p>\n In my conversations with managing partners, I\u2019ve learned that ownership alone doesn\u2019t define leadership \u2014 it\u2019s the level of responsibility that sets managing partners apart.<\/p>\n This leadership structure can be a game-changer for scaling a business. Daniel Snow<\/a>, managing partner at TRAFFIX, a logistics company that scaled from $71 million to over $1 billion, credits their three-managing-partner model as a critical factor in their success.<\/p>\n \u201cOne of the key factors behind TRAFFIX\u2019s remarkable growth\u2026 was the strategic leadership structure of having three managing partners, each with unique and complementary skill sets. This approach created a well-rounded leadership team that filled in skill gaps, ensured diverse perspectives, and eliminated decision-making deadlocks.\u201d<\/p>\n He also emphasized that great managing partners know their weaknesses and rely on others to fill the gaps. Instead of trying to do everything themselves, they focus on building a strong leadership team and investing in people.<\/p>\n According to the IRS\u2019s Statistics of Income Bulletin Fall of 2024<\/a>, with partnerships filing 4.5 million returns and representing over 28 million partners in the 2022 tax year, it\u2019s clear that defining leadership roles within these structures is crucial for sustainable growth.<\/p>\n For many businesses, the difference between an owner and a managing partner isn\u2019t just about title \u2014 it\u2019s about who steps up to lead.<\/p>\n Before speaking with managing partners, I assumed all business partners had similar levels of involvement. However, I quickly learned that limited partnerships are structured to separate management control from financial investment.<\/p>\n Limited partnerships have two types of partners:<\/strong><\/p>\n A managing partner is typically a general partner who takes on leadership responsibilities, such as setting strategy, overseeing daily operations, and making key financial decisions.<\/p>\n According to the IRS, limited partnerships represent only 9.9%<\/a> of all partnerships, yet they account for over 36% of total pass-through income \u2014 showing how financially impactful they can be despite being a smaller portion of business structures.<\/p>\n For example, venture capital (VC) firms often follow this model. The general partners (GPs) manage the fund and make investment decisions, while limited partners (LPs) \u2014 such as pension funds or wealthy individuals \u2014 provide capital but have no direct control over day-to-day operations.<\/p>\n Want to understand how a general partner differs from a managing partner? Check out the next section for a full breakdown.<\/p>\n While the terms general partner and managing partner are sometimes used interchangeably, they have distinct roles depending on the business structure.<\/p>\n A General Partner:<\/strong><\/p>\n A managing partner:<\/strong><\/p>\n Key Distinction: <\/strong>A general partner is responsible for managing a partnership, but in some cases, partnerships designate a managing partner to lead strategic direction and decision-making. In LLCs, managing partners function similarly but often operate within a more flexible structure.<\/p>\n Why This Matters: <\/strong>If you\u2019re structuring a business partnership, understanding the difference between a general partner and a managing partner can help you determine the right leadership setup for your company.<\/p>\n <\/a> <\/p>\n One theme that stood out in my conversations with managing partners is that this role goes beyond a title \u2014 it requires making high-stakes decisions that directly impact the business. Managing partners drive strategy, make tough decisions, and ensure the business runs smoothly while balancing long-term growth.<\/p>\n From my perspective, a strong managing partner creates stability, fosters innovation, and sets a company apart from competitors.<\/p>\n From what I\u2019ve seen, managing partners are right in the thick of every major decision, making sure everyone is pulling in the same direction. Whether they\u2019re figuring out how to grow the business, handling risky situations, or adapting to industry changes, they keep things moving forward.<\/p>\n Take Jennifer Compton\u2019s<\/a> story at Shumaker. As the first managing partner of a law firm that\u2019s been around since 1925, she puts it perfectly:<\/p>\n \u201cWhen I started my career, I never set out with firm management as my specific goal. I just wanted to be a great lawyer. But each step \u2014 associate to partner, and eventually to leadership \u2014 was built on trust, accountability, and the desire to contribute to the firm\u2019s long-term success.\u201d<\/p>\n What hits me about Compton\u2019s journey is what it reveals about great managing partners \u2014 they\u2019re not just running the business today. They\u2019re building something that lasts, creating opportunities and developing future leaders along the way.<\/p>\n With their deep understanding of the business, managing partners ensure that decisions aren\u2019t just reactive but aligned with long-term success. Their ability to navigate complex challenges is especially crucial for businesses aiming to scale.<\/p>\n First Round Capital\u2019s research<\/a> supports this, revealing that teams with more than one founder outperformed solo founders by 163%, and solo founders\u2019 seed valuations were 25% lower than teams with multiple founders. These findings highlight how shared decision-making \u2014 like having a managing partner alongside other leaders \u2014 contributes to stronger business performance and financial outcomes.<\/p>\n I\u2019ve seen firsthand how managing partners dive deep into the money side of things. They\u2019re not just glancing at spreadsheets. They\u2019re making tough calls about where every dollar goes and how to keep the business profitable. From haggling over contract terms to figuring out how to boost revenue, they\u2019re the ones making sure the numbers add up.<\/p>\n In my conversations with managing partners, they consistently emphasized one thing: If you want your company to grow and stay profitable, you need someone at the top who really understands the financial side of the business. I\u2019ve watched companies struggle when they don\u2019t have this kind of financial leadership, and thrive when they do.<\/p>\n A managing partner\u2019s leadership extends beyond financial and strategic decisions \u2014 they also shape company culture. Prioritizing employee growth and fostering a collaborative environment leads to better retention, productivity, and overall job satisfaction.<\/p>\n I think Richard Branson, CEO and founder of Virgin Group, put it best<\/a>: \u201cClients do not come first. Employees come first. If you take care of your employees, they will take care of the clients.\u201d<\/p>\n Strong leadership at the top creates a ripple effect throughout the organization, leading to a more engaged and high-performing team.<\/p>\n Industries evolve, so managing partners must stay ahead of trends and embrace change. Those who are willing to pivot, innovate, and adapt tend to be the most successful in leadership roles.<\/p>\n McKinsey\u2019s 2024 report on business agility<\/a> found that companies with adaptable leadership structures are 1.5 times more likely to outperform competitors in rapidly changing markets. This aligns with what I\u2019ve heard from managing partners who emphasize long-term strategy over chasing short-term trends.<\/p>\n Rafikuzzaman Khan<\/a>, managing partner at Microters Germany, shared how he approaches this challenge:<\/p>\n \u201cSince I have to make crucial decisions, I\u2019m now focusing on creating long-term strategies where we can integrate these changes in a sustainable way.\u201d<\/p>\n Khan\u2019s insight reinforces an important lesson \u2014 managing partners who stay ahead of industry shifts and technology trends position their businesses for long-term success.<\/p>\n <\/a> <\/p>\n A managing partner isn\u2019t just another executive; they\u2019re an owner who\u2019s got their own money and reputation on the line. Unlike a CEO who might just be hired to run things, they\u2019re personally invested in making the business work.<\/p>\n Here\u2019s what they actually do:<\/strong><\/p>\n Managing partners don\u2019t always oversee every function directly \u2014 they often delegate responsibilities based on their strengths, background, and business needs.<\/p>\n For example, Mark Donnolo, managing partner at SalesGlobe, takes a hands-on approach to business development, intellectual property creation, and content marketing. His focus stems from his background and expertise in these areas. Other managing partners may emphasize different priorities.<\/p>\n At Signify Digital, a U.K.-based marketing agency structured as a limited company (similar to an LLC in the U.S.), Beth Sherman and Nathan Palmer split responsibilities based on their strengths.<\/p>\n \u201cHaving two partners suits our business well,\u201d says Sherman. \u201cWhile we have the same passion and vision, we each bring a different skill set to the company.\u201d<\/p>\n Sherman leads client management and business development, while Palmer focuses on work delivery and campaign strategy.<\/p>\n Since managing partners are responsible for business growth and client relationships, having the right tools can make all the difference. Platforms like HubSpot\u2019s Sales Hub<\/a> help managing partners:<\/p>\n By leveraging automation and analytics, managing partners can spend less time on manual tasks and more time driving strategy.<\/p>\n I\u2019ve learned that this flexibility is a key benefit of the managing partner structure. Partners can tailor their roles based on what best serves the company. Some managing partners take an active leadership role, while others act more as investors or strategic advisors. The key is ensuring that all core responsibilities are covered, whether through delegation or direct oversight.<\/p>\n [alt text] managing partners, HubSpot Sales screenshot showing Prospecting dashboard<\/em><\/p>\n Get started with Sales Hub today.<\/em><\/a><\/p>\n <\/a> <\/p>\n Through my conversations with managing partners, I\u2019ve learned there\u2019s no single path to this role. Some rise through the ranks in their firms, others transition from entrepreneurship, and some find leadership after unexpected career shifts. I think what stands out in each journey is a mix of expertise, adaptability, and a willingness to take on responsibility.<\/p>\n Here\u2019s how four managing partners built their careers \u2014 and what aspiring leaders can learn from them.<\/p>\n For many managing partners, the first step is mastering their field before stepping into leadership. Jennifer Compton, the first managing partner of Shumaker law firm, spent years specializing in employment law counseling and litigation before taking on firm-wide leadership.<\/p>\n She initially served as vice chair of Shumaker\u2019s management committee and managed the firm\u2019s Sarasota office before becoming the first person to hold the managing partner title.<\/p>\n Her journey highlights an important truth: Leadership opportunities often emerge for those who build deep expertise and earn the trust of their peers.<\/p>\n For some, the path to becoming a managing partner happens through growing a company strategically. Daniel Snow, managing partner at TRAFFIX, helped dramatically scale the business, but his journey began long before that.<\/p>\n Growing up in a family-owned logistics company, Snow was immersed in the business from an early age. After completing university, he launched his own company and later merged it back into TRAFFIX. This blend of entrepreneurship and operational experience positioned him for leadership.<\/p>\n \u201cI learned early on to ask myself two key questions: \u2018What can I do better?\u2019 and \u2018What can the company do better?\u2019\u201d Snow explained. \u201cBy acknowledging my limitations and investing in the growth of others, I helped foster an environment where the business could expand well beyond the initial vision of its founders.\u201d<\/p>\n Looking at his story, I\u2019ve realized that scaling isn\u2019t just about watching revenue grow \u2014 you\u2019ve got to have the right leaders steering the ship.<\/p>\n Not every managing partner starts with a clear path to leadership. Yusef-Andre Wiley<\/a>, managing partner at Timelist Group, turned his life around after a period of incarceration, proving that leadership can emerge from unexpected places.<\/p>\n \u201cOnce I began taking courses related to self-help and business management, my lifestyle began to change,\u201d Wiley said. \u201cEmpathy became my landing place, which enabled me to deal with people where they are at \u2014 not to harm, not to judge, and to believe in second chances.\u201d<\/p>\n His work in re-entry housing and rehabilitation programs for former felons led to partnerships with funders, elected officials, and nonprofit leaders \u2014 eventually growing Timelist Group into a recognized organization.<\/p>\n When I look at Wiley\u2019s path, I\u2019m reminded that technical skills only get you so far. What really matters is having a vision you believe in, pushing through the tough times, and using your past experiences to make a real difference.<\/p>\n Some managing partners step into the role after realizing they want to lead differently. Yvette Schmitter<\/a>, managing partner at Fusion Collective, spent years in corporate tech leadership, working her way up at a Big Four consulting firm before making a bold decision: to leave and build something of her own.<\/p>\n \u201cThe turning point came when I realized two fundamental truths: The organizational culture I was in no longer aligned with my soul\u2019s purpose, and there were entire communities being overlooked that I knew I could help transform,\u201d Schmitter said.<\/p>\n She launched Fusion Collective with a mission to make technology more accessible and equitable, proving that sometimes the best way to lead is to create the kind of business you want to see in the world.<\/p>\n While each of these managing partners took different paths, I noticed some common themes in my research and conversations. If you\u2019re looking to step into this role, here are some key steps that can help.<\/p>\n While there\u2019s no formal requirement, most managing partners start with a bachelor\u2019s degree in business, law, or finance. An advanced degree like an MBA can further set candidates apart \u2014 particularly in finance-heavy industries. About 22%<\/a> of the world\u2019s top CEOs hold an MBA, highlighting its value in leadership roles.<\/p>\n Before stepping into leadership, building experience in management roles is crucial. This might involve:<\/p>\n Many managing partners start as specialists in their field before expanding into business management.<\/p>\n Managing partners often rise through strong professional networks. Relationships with mentors, industry leaders, and business partners can open doors.<\/p>\n According to findings from a 2022 survey, 42% of professionals<\/a> found their current jobs through some form or effect of networking<\/a>, including referrals, applying to openings shared in their network, and more.<\/p>\n Most managing partners serve in leadership capacities before they officially get the title. Whether it\u2019s:<\/p>\n Compton\u2019s career is a great example of this. She served as vice chair of Shumaker\u2019s management committee and managed a regional office before stepping into the managing partner role.<\/p>\n A managing partner isn\u2019t just a high-level executive \u2014 they\u2019re often directly responsible for a firm\u2019s financials, hiring, and operations. Learning how a business runs<\/a> from the inside out is key to success.<\/p>\n Since industries evolve, it\u2019s imperative for managing partners to stay up on trends to make strategic decisions. Those who continuously learn will innovate and adapt, leading to success in leadership roles.<\/p>\n While no two paths to becoming a managing partner are identical, some common themes emerged:<\/p>\n Whether you work your way up within a firm or launch your own business, the path to managing partner requires a mix of skill, strategy, and opportunity.<\/p>\n <\/a> <\/p>\n A partnership agreement is a written agreement between business partners or LLC members. It lays out important information about the company, such as:<\/p>\n Sometimes, you need to draw up this agreement<\/a> early on, especially if there are seed investors who want to contribute capital and need to know their rights and ownership share.<\/p>\n At other times, if you are starting a new venture, you may not know who will be involved and whether you will raise investment. In that case, you might want to let the idea shape out a little before you formalize things.<\/p>\n That being said, it\u2019s very important to get things on paper.<\/p>\n \u201cTeaming up with people always seems fun and rosy and optimistic in the beginning,\u201d says Donnolo, \u201cbut when things really get tough, that\u2019s when personalities and differences start to show. Operate on the assumption that we need to make sure everybody\u2019s gonna be protected, just in case.\u201d<\/p>\n Donnolo recommends speaking to an attorney and, if you can afford it, an executive compensation consultant when you write up your agreement. However, there are some simple templates you can start with if that\u2019s out of your budget. The agreement should be reviewed and tweaked as your company grows and evolves.<\/p>\n <\/a> <\/p>\n Compensation structures for managing partners can be complicated, as they can take different forms and will vary from one business to the next.<\/p>\n Partnerships (as well as some LLCs) are flow-through tax entities, which means the company\u2019s income (both profits and losses) passes directly on to the owners. This is called a distributive share.<\/p>\n Most of the time, partners receive a distributive share that is proportional to their ownership percentage. For example, if one partner owns 80% of the business and the other owns 20%, they will split any profit 80-20.<\/p>\n Partners can also choose to divide their income however they like by outlining the arrangement in their partnership agreement. This can be done for tax purposes or for any other reason, such as if one partner is taking more of a reputational risk.<\/p>\n According to IRS rules, a partner cannot be considered an employee or be put on the payroll. However, if a partner contributes services or capital to the business, they may receive a guaranteed payment in lieu of a salary.<\/p>\n This is a fixed payment that ensures the partner has predictable income even if the company doesn\u2019t make a profit. Guaranteed payments differ from a salary in that they are not subject to payroll tax. Instead, they will be taxed as ordinary income as part of the partner\u2019s individual tax return.<\/p>\n Managing partners and any other active partners may also receive an additional payment in lieu of a performance incentive or bonus, but again, this payment is not taxed via payroll and is not technically classified as a paycheck.<\/p>\n In Sherman and Palmer\u2019s case, they split everything 50-50. They take a fixed amount from the business each month and review that figure every six months. Any excess profit is reinvested in the business or kept in a fund for future use.<\/p>\n \u201cWe have found that an equal share of decisions, challenges, and rewards keeps us both motivated and on our toes at the same time,\u201d says Sherman.<\/p>\n Of course, the owners\u2019 biggest advantage is owning a portion of the business. If the business grows and succeeds, the owners\u2019 equity portion<\/a> will become an increasingly valuable asset.<\/p>\n By default, an LLC with multiple members is treated by the IRS as a partnership. This means the managing partner\u2019s compensation will be paid (and taxed) in the same way as if the business was a partnership.<\/p>\n However, an LLC can also choose to be treated as a corporation, which is sometimes done for tax purposes. In that case, members must be hired as employees and paid a salary to earn an income. They can also earn a share of the profits in the form of dividends.<\/p>\n If your business is an LLC, it\u2019s a good idea to consult an accountant to work out salary and dividend amounts, as there are regulations and tax implications.<\/p>\n\n
What is a managing partner in an LLC?<\/strong><\/h2>\n
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Managing Partners in Partnerships<\/strong><\/h3>\n
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Managing Partner vs. CEO<\/strong><\/h2>\n
Managing Partner vs. Owner<\/strong><\/h3>\n
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Managing Partner vs. Limited Partner<\/strong><\/h3>\n
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<\/p>\nGeneral Partner vs. Managing Partner<\/strong><\/h3>\n
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Why is a managing partner important for a business?<\/strong><\/h2>\n
1. Steering the Ship<\/strong><\/h3>\n
2. Improved Decision-Making and Growth Potential<\/strong><\/h3>\n
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<\/p>\n3. Talent Development and Employee Retention<\/strong><\/h3>\n
4. Adaptability in a Changing Business Landscape<\/strong><\/h3>\n
Managing Partner Role and Responsibilities<\/strong><\/h2>\n
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How Managing Partners Divide Responsibilities<\/strong><\/h3>\n
Using Tools to Manage Growth<\/strong><\/h3>\n
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<\/p>\nHow to Become a Managing Partner<\/strong><\/h2>\n
1. Moving From Specialist to Leader<\/strong><\/h3>\n
2. Scaling a Business as a Managing Partner<\/strong><\/h3>\n
3. Reinventing Leadership After Setbacks<\/strong><\/h3>\n
4. Leaving Corporate to Build Something New<\/strong><\/h3>\n
Common Steps to Becoming a Managing Partner<\/strong><\/h3>\n
1. Educational Foundation<\/strong><\/h4>\n
2. Gaining Practical Experience<\/strong><\/h4>\n
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3. Strategic Networking<\/strong><\/h4>\n
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<\/p>\n4. Taking on Leadership Roles<\/strong><\/h4>\n
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5. Understanding Business Operations<\/strong><\/h4>\n
6. Continuous Learning and Adaptability<\/strong><\/h4>\n
Key Takeaways From Managing Partners\u2019 Career Paths<\/strong><\/h4>\n
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Managing Partner Agreement<\/strong><\/h2>\n
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Managing Partner Compensation<\/strong><\/h2>\n
Distributive Share<\/strong><\/h3>\n
Guaranteed Payment<\/strong><\/h3>\n
Equity<\/strong><\/h3>\n
Compensation in an LLC<\/strong><\/h3>\n
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