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1. Answer a number of
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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?
MEMBER LLC OPERATING AGREEMENT
Multi-Member Operating Agreement
It is extremely important for all multi-member LLCs to have
a LLC Operating Agreement. 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. Even though the LLC Operating Agreement
is not required to be filed with any state agency, it is unwise
to operate an LLC without an LLC Operating Agreement.
The Operating Agreement governs the operation and management
of the LLC. It describes the business and economic arrangement
of the members. The LLC agreement generally specifies, among
other things, the business name, the official business address,
the identities of the members, the way in which cash is distributed
to the members, the way in which profits and losses are to be
divided between the members, and how the company will be managed.
The Operating Agreement should also reflect each member’s
financial contributions to the LLC and the member’s ownership
The members of a limited liability company (“LLC”)
will benefit from the limited liability associated with a LLC
as well as the benefit of a single level of tax and the flow-through
of business losses.
A multi-member LLC can be either treated for tax purposes as
a partnership or a corporation, including an S corporation.
To be treated as a corporation, an LLC has to file a Form 8832,
Entity Classification Election, and elect to be taxed as a corporation.
A multi-member LLC that does not so elect will be classified
by the IRS as a partnership. A single member LLC can be either
treated for tax purposes as a corporation or a single member
LLC Operating Agreements