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Why a Single Member LLC Needs an Operating Agreement

Most entrepreneurs think it is easy to form a single member LLC. You can log onto Sunbiz, pay a fee and file the form to create your LLC. But is that enough to give you the protection you need? LLC’s need to have rules about operating itself and contemplate all the “what if” scenarios that come into play as a business grows. That’s why you need an operating agreement.

An operating agreement is a document that governs the operations of an LLC and how the members interact with the LLC. Even if an LLC has one owner, an operating agreement is needed because:

1. Without an operating agreement, your LLC will be governed by the statutory default provisions. If you are not well versed in what these statutes contain, you could be violating the rules that govern your LLC and not even know it! An operating agreement will make sure your LLC reflects your goals for governance and growth and offer additional protection for your limited liability status.

2. An operating agreement helps differentiate the LLC from the owner for liability purposes. An LLC with one owner is at a higher risk for piercing the veil of limited liability protection. An operating agreement helps show that the owner is separate from the business and the business is being operated as a separate entity with a separate set of rules. This is very important for asset protection purposes.

3. An operating agreement can specify what happens if something unexpected happens to you. It can include provisions about what happens if you die or become incapacitated. Without an operating agreement, it will be difficult for your business to continue or wind down.

You’ve completed all the filing steps to open your business, now make sure that your business is set up to be governed properly! Implementing a simple operating agreement with the guidance of a business attorney will give you peace of mind! It can also protect you and your LLC from all the unforeseen circumstances that you may encounter as you grow in the small business world.

Wheeler Legal, PLLC can provide the assistance you need to set up your LLC and create your operating agreement to ensure your business is safe and able to succeed. Call us at 321.209.5995 to schedule a consultation!

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.


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