A Perfect Operating Agreement in 2 Easy
1. Answer a number of
simple multiple choice questions
2. View your customized Operating
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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?
EVERY LLC NEEDS AN OPERATING AGREEMENT?
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. 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. It is extremely important that
you create an Operating Agreement for your LLC entity. Without
the formality of an agreement, the basic operation of the LLC
would be governed by state law, which may not be advantageous
to the LLC, it members, or the business it conducts. Each state
LLC statute contains basic operating rules for LLCs, some of
which will govern your business unless your Operating Agreement
states otherwise (these are called "default rules.").
let the State tell you how to run your LLC
LLC statutes, for example, have default rules that govern
how certain business decisions should be made, such as how
the LLC will be managed, rules for holding meetings and taking
votes, rules for the sale of the LLC, how profits and losses
should be allocated, amending the Operating Agreement, admitting
a new member, and dissolving the LLC. Defaulting to state
law for important LLC decisions could jeopardize your business.
If you don’t want the state to tell you how to run your
LLC, it’s important that you have a well drafted LLC
Operating Agreement. By having an Operating Agreement, you
can decide the rules that will govern your LLC's inner workings,
rather than having to follow state default rules that may
or may not be right for your LLC.
your Limited Liability Status
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, even if you're the
sole owner of your LLC.
It is extremely important that you create an Operating Agreement
to separate yourself as an individual from your LLC, even
if you are the sole owner of your LLC. Without the formality
of an Operating Agreement, the LLC can closely resemble a
sole proprietorship, which does not limit your personal liability
for business debts of the LLC. Without an LLC Operating Agreement,
the basic operation of the LLC would then be governed by state
law, which may not be advantageous to the LLC, it members,
or the business it conducts.
LLC Operating Agreements