Who should have an Operating Agreement?
All LLCs, even single member LLCs, should have an operating agreement. An operating agreement is a document which describes the operations of the LLC and sets forth the agreement between the members (owners) of the business. An operating agreement helps separate the business from the owner(s). Keeping this separateness protects the owner(s) personal assets.
What is an Operating Agreement?
Operating Agreements establish the structure of your company, help protect your limited liability status, and create the governing rules of your business. An operating agreement lays out the relations among the members and between the members and the LLC. It also specifies the rights and duties of the LLC’s manager, clarifies how LLC funds are contributed and distributed to the owner and explains what happens if the owner dies or is unable to run the business.; that is, it creates a succession plan.
Why is an Operating Agreement Important?
Besides offering liability protection, LLCs are popular because of the flexibility they offer. With an LLC, members can decide how they’ll split profits, work-load, distribution of shares and more. If your LLC has an operating agreement, you can customize your business structure.
If you do not create an LLC Operating Agreement, you will be subject to your state’s default LLC rules. These rules will not be tailored to the wants and needs of your business. Every company is unique and every owner should have the ability to shape their rules to fit the goals and hopes of their business.
Your attorney can make sure all the relevant clauses are included, and she can tailor the document to the requirements of your state and your individual business.
It is important to contact a licensed attorney if you’d like to discuss the drafting of an operating agreement. You can contact Wheeler Legal PLLC by calling (321) 209-5995 or emailing at email@example.com to schedule a consultation and find out how this firm can help you.
Disclaimer: The information contained above is provided for general informational purposes only, and does not constitute legal advice, nor is it intended to create an attorney-client relationship. This firm aims to provide quality information, but we make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the information contained in or linked to this post. Nothing provided herein should be used as a substitute for the advice of competent counsel.