Business Operating Agreement: Does My LLC Need One?
If you are in the process of creating, or have recently created, a Limited Liability Company, you may want to look into creating an operations agreement for your LLC. An operating agreement is a legal document among company members governing the LLC’s business, and details the rights and duties of the company’s members. An operating agreement is required by many states in the U.S. Be sure to make sure you obtain an operating agreement prior to creating your LLC if your state requires you to have one.
What is an Operating Agreement?
LLC operating agreements serve several purposes for the members of the company. First and foremost, an operating agreement legally protects the company and its members by defining the operating terms of the business in a written record. Important company details such as the purpose of the LLC, physical company location and phone number, management/founder roles, accounting procedures, and policy for dissolution if one or more founding members leaves or if the company is dissolved, are all included in the operating agreement, making it an extremely valuable document if legal matters ever arise. Since it is a legal, binding document, the terms agreed to in the operating agreement by the founding members of the LLC must be adhered to by law.
Another important function of a LLC operating agreement is to serve as an outline for the business plan as a whole. Since important decisions, from profit sharing and distribution policies to tax-related questions, are dealt with in the body of the operating agreement, LLC members can then use the agreement as the basis for the rest of the company setup process. This can eliminate future problems by helping you think through every aspect of the formation of your company.
Business Attorneys Serving Thibodaux, LA
When entering into an LLC with co-founders, it is wise to hire your own attorney to represent you. While it is tempting to save money by hiring one business lawyer for the LLC as a whole, keep in mind that an attorney working solely for you can focus on your best interests and protect them if they are in contrast with the interests of the other partners. Waltz & Downer has the necessary experience to ensure that your assets will be protected. Our specialized business lawyer can help you draft your LLC’s operating agreement. If you are in the Thibodaux, LA area, contact Waltz & Downer today!