Why Every LLC Needs An Operating Agreement
LLC Agreement
It is extremely important that every limited liability company (“LLC”) have an LLC Operating Agreement. The LLC Operating Agreement is the core document that is referred to when issues concerning the LLC need to be resolved and is the most important document for your LLC.
Why should every Single Member LLC (1 owner) owner have an operating agreement?
It is imperative 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.
Why should every Multi-Member LLC (more than one owner) have an operating agreement?
The Operating Agreement governs the operation and management of the LLC. It describes the business and economic arrangement of the members (partners). LLCs need to document important and material issues that could impact the members, such as profit-sharing and decision-making rules as well as their procedures for handling the departure/addition of members, and the dissolution/termination of the LLC.
In both cases, without an LLC Operating Agreement, the basic operation of a LLC would then be governed by state law, which may not be advantageous to the LLC, it members, or the business it conducts.
Getting a well Drafted LLC Operating Agreement
A well drafted LLC Operating Agreement is essential to correctly governing the inner workings of the LLC. The problem facing many entrepreneurs and small business owners is that lawyers tend to charge thousands of dollars for an LLC Operating Agreement even for the simplest of businesses. Many entrepreneurs and small business owners have been turning to the internet to find an LLC Operating Agreement. When starting a new business, every penny counts. The internet nowadays offers numerous legal self help websites that allow entrepreneurs to have an easy and inexpensive way to receive a law firm quality LLC Operating Agreement that allows them to be well protected.
About the Author
Guest Post: Adam Bergman, Esq. is the president and creator of MyLLCAgreement.com, the leading online provider of customized LLC Operating Agreements. He has worked as a corporate and tax attorney at White & Case LLP and Dewey LeBoeuf LLP, two of the most prominent law firms in the United States where he advised thousands of entrepreneurs and business owners on a wide range of corporate and tax issues involving limited liability companies for the past seven years. Adam is recognized as a leading partnership tax expert and has lectured attorneys on the taxation of LLCs.
