What is an Operating Agreement?
The operating agreement sets forth the guidelines for an LLC, it outlines the ownership and operating procedures of your LLC. This document outlines the working relations, including financials, among the members of the LLC.
The details vary depending on several factors: number of members, the structure itself, tax considerations, and sharing of profits, among others. If there is more than one member in your LLC then it becomes a binding legal contract.
Beware that an Operating Agreement might be required
In some states having an Operating Agreement is required, therefore if you are forming an LLC in California, Delaware, Maine, Missouri, Nebraska, and New York make sure you get one, they are required in those states.
Do I Need an Operating Agreement?
If you are not forming an LLC in the states mentioned above we highly recommend drafting one. In the case of a multi-member LLC, an operating agreement will set expectations above all of the member’s roles and responsibilities.
On the other hand, if you are forming a single-member LLC, then an operating agreement will ensure courts respect your limited liability status.
Basic Provisions
Any basic operating agreement for LLC contains the following provisions:
- Identifying Information
- Statement of Intent
- Business Purpose
- Terms
- Tax Treatment
- Admission of New Members
IncFile can help you draft an operating agreement for your LLC online quickly and affordably.
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