What is an LLC Operating Agreement?
An LLC Operating Agreement is the document where a Limited Liability Company memorializes its rules and structure. It’s perhaps the most crucial document an LLC creates, as it creates the unique roles and framework of a business. Every LLC should have one.
Although many states do not require LLCs to create Operating Agreements, most do not, and this doesn’t mean you should not create one. These agreements allow you to personalize your business structure while avoiding generic state rules and will protect your limited liability.
Be aware that no state requires an LLC to file its operating agreement with the Secretary of State but instead, you should keep them with your records.
It is always a great idea to produce a formal agreement between LLC members. This will allow you to avoid disagreements down the road while mapping out precisely who is responsible for precisely what, distribution of profits the way your company sees fit, and protect your all-important limited liability status.
In other words, creating an operating agreement can save you tons of struggles and strife in the future. Put your company’s rules and roles from word of mouth to pen and paper, and protect your assets today.