Signed Operating Agreement for Llc

As a small business owner, it’s important to dot all your i’s and cross all your t’s when it comes to legal matters. One of the most important documents you’ll need to have in place for your limited liability company (LLC) is a signed operating agreement.

What is an LLC operating agreement?

An LLC operating agreement is a legal document that outlines the rights, duties, and obligations of the members of an LLC. It’s essentially a contract between the members that governs how the LLC will be run.

Why is an operating agreement important?

While some states don’t require LLCs to have an operating agreement, it’s still a good idea to have one in place. Here are a few reasons why:

1. It provides clarity: An operating agreement helps ensure that all members are on the same page when it comes to how the LLC will be managed. It helps avoid misunderstandings and confusion down the line.

2. It protects your limited liability status: Without an operating agreement, your LLC may be viewed as a sole proprietorship or partnership, which could jeopardize your limited liability status. An operating agreement helps establish that your LLC is a separate legal entity.

3. It can make it easier to secure funding: Some lenders and investors may require a copy of your operating agreement before they’ll consider providing funding.

What should be included in an LLC operating agreement?

While the specifics of an operating agreement will vary depending on the nature of your LLC, there are a few key provisions that should be included:

1. Ownership percentage: The operating agreement should outline each member’s ownership percentage in the LLC.

2. Management structure: The agreement should specify whether the LLC will be managed by its members or by a designated manager.

3. Voting rights: The operating agreement should clarify how voting will work within the LLC, including how many votes each member is entitled to and what decisions require a vote.

4. Distribution of profits and losses: The agreement should outline how profits and losses will be distributed among the members.

5. Buyout provisions: The operating agreement should include provisions outlining what happens if a member wants to sell their interest in the LLC, or if a member dies or becomes disabled.

How do I create an operating agreement?

While it’s possible to create an operating agreement on your own using a template or sample document, it’s a good idea to have a lawyer review it to make sure it covers all your bases. An experienced lawyer can help you customize the agreement to your specific needs and ensure that it complies with all applicable laws.

Once your operating agreement is finalized, make sure all members sign and date it. It’s a good idea to keep a copy on file with your LLC’s other important documents.

In conclusion, having a signed operating agreement is crucial to the success of your LLC. Not only does it provide clarity and protection, it can also help you secure funding and avoid legal issues down the line.