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Benefits of an Operating Agreement

Operating Agreements are essential for governing your LLC but many business owners don’t even have this document! There are many benefits to having an Operating Agreement for your LLC, even if you have a single member LLC.

An operating agreement is a document that governs the operations of an LLC and how the members interact with the LLC.

Some of the benefits of an Operating Agreement are:

1. Protection. Protecting you from personal liability is essential. While filing your business as an LLC protects your from personal liability, an Operating Agreement only strengthens that protection. If you ever find yourself in court for a dispute, an Operating Agreement may show the courts that you’re serious about your business.

2. Member Details. LLC members need to work together and agree on several details. An Operating Agreement outlines important items such as member responsibilities and compensation, ownership, etc. If these items are in writing, you’ll have a guide that allows you to solve conflicts swiftly and efficiently.

3. Day-to-Day Procedures. There are so many procedures to consider when running an LLC. Things like voting, meetings, communication methods, and conflict resolution must be addressed in writing. These day-to-day procedures should be straightforward and easy to follow.

4. Avoiding Default Laws. Without an Operating Agreement, your LLC is subject to default State Laws. These default laws may not be the best fit for your business. An Operating Agreement overrides these defaults and allows you to customize for your business and its specific needs.

5. Legitimizes Your LLC. Having an Operating Agreement shows people that your business is properly established and therefore, can be trusted. People will see that you’ve taken the extra steps to intentionally organize your business. Also – this is a good thing to have when you need investors!

Wheeler Legal, PLLC can assist you with drafting or reviewing an Operating Agreement. Call us at (321) 209-5995 to set up a consultation! Disclaimer: The information contained in the above post 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 in these blog posts should be used as a substitute for the advice of competent counsel.


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