A Perfect Operating Agreement in 2 Easy
Steps:
1. Answer a number of
simple multiple choice questions
2. View your customized Operating
Agreement
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Create
Your LLC Operating Agreement Checklist
1. Decide a
name for your LLC
2. Principal Office
3. Registered Agent/Office
4. Initial members
5. Decide the ownership interests of each member
6. Decide the amount of capital each member will contribute.
7. Will any members be granted an interest solely for
the performance of services?
Learn
More
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THE
DIFFERENCE BETWEEN ARTICLES OF ORGANIZATION AND THE LLC OPERATING
AGREEMENT?
The Articles of Organization (in some states this document is
called a certificate or organization or certificate of formation)
is an organizing document that is filed with the state limited
liability company (“LLC”) filing office. An LLC
comes into existence when its Articles of Organization are filed
with the state LLC filing office. Any person can file the Articles
of Organization. This person need not be a member of the LLC.
In other words, the Articles of Organization is essentially
a formation document that is filed with the state LLC filing
office to form an LLC. The Articles of Organization typically
contain basic organization information about the LLC, such as:
• The name of the LLC
• The name and addresses of its members and/or managers
and its registered agent
• The registered agent’s address (where legal papers
can be sent by the state and by persons serving legal process
on the LLC)
• Whether the LLC will be managed by its members or selected
managers
For the majority of LLCs, no additional information is required
in the document.
In contrast, the LLC Operating Agreement is the core document
that is referred to when issues concerning the LLC need to be
resolved. The LLC Operating Agreement is the most important
document for your LLC. The LLC Operating Agreement does not
have to be filed with any state agency. The LLC Operating Agreement
reflects the agreement among the members with respect to the
affairs and management of the LLC and governs the relationship
among the members of the LLC. By having an LLC Operating Agreement,
the members will be provided with a clear set of rules that
all members have agreed upon, greatly reducing the likelihood
of disagreement between members in the future.
An LLC Operating Agreement will greatly reduce financial and
management misunderstandings, and assure your business is governed
by your own rules, not default rules created by your state.
The Operating Agreement governs the operation and management
of the LLC. It describes the business and economic arrangement
of the members. The LLC Operating
Agreement generally specifies, among other things:
• The name of the business
• The official business address
• The name of the members
• The business purpose of the LLC
• Capital accounts
• The withdrawal of Members
• The amount of money or property contributed by the members
• Additional capital contributions
• How disputes among members will be handled
• How the business will be managed
• Conduct of meetings
• Voting
• Rights, duties, and liabilities of the members
• Rights, duties, and liabilities of the managers
• Indemnification of managers
• How cash will be distributed to the members
• How profits and losses will be allocated to the members
• Under what circumstances will members be permitted to
transfer their interest to a third-party
• Will the members be granted a “right of first
refusal” or a “right of first offer”
• Will the members be granted “Drag-Along”
and/or “Tag-Along” rights
• Will the members be provided with “tax distributions”
• The duration of the LLC
• Books and records
• Termination
• Dissolution
• Amendments
• Notice
• Arbitration/Court of Law
• Governing Law
All statutes
allow an LLC to adopt an Operating Agreement
and will give the Operating Agreement full force and effect.
The Operating Agreement will only be enforced against the
persons who are parties to the agreement. Therefore, it is
extremely important that all members of an LLC sign the Operating
Agreement.
The LLC
Operating Agreement is the most important LLC document. The
LLC Operating Agreement is an unrecorded document which reflects
the agreement among the members of the LLC and assures the
business is governed by its own rules, not default rules created
by the state. On the other hand, the Articles of Organization
primarily serves as the document that is filed with the state
to form the LLC and is generally not relied upon to establish
how the LLC will be operated and managed.
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State
LLC Operating Agreements
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West-virginia
Wisconsin
Wyoming
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