Create an LLC Operating Agreement with LegalZone
Create an LLC Operating Agreement with LegalZone
What Is an Operating Agreement for an LLC?
A Limited Liability Company, or LLC, is a typical business structure for startups and small companies.
An LLC operating agreement (sometimes called an operating agreement, LLC agreement, or LLC partnership agreement) is a legal document that outlines the rights and responsibilities of each LLC member. The document also includes information covering procedures, hours of operation, the hiring process, and more.
What Is Included in an LLC Operating Agreement?
- LLC Information: company name, description of products/services, office address, etc.
- Member Information: name, address, membership class, capital contributed, ownership percentage, and profit/loss share. This section may also include clauses about a member terminating their relationship with the LLC, asset distribution if the company is dissolved, and disclosure agreements.
- Management: management structure, decision-making procedure, when/where team meetings will be held, etc.
- Administration: financial details, tax classification, administrative tasks, accounting methods, fiscal year, annual report information, who can sign contracts on behalf of the business, etc.
What If an LLC Has No Operating Agreement?
Not having an operating agreement opens the door for many issues if all LLC members aren’t on the same page.
Creating a formal agreement gives LLC members a set of expectations, procedures, and protections. Think of an LLC as a business version of a prenup. In a worst-case scenario, you’ll know that you can leave with your fair share of the assets.
How Do I Set Up an LLC Operating Agreement?
The first step is to sit down with all LLC members and discuss expectations and procedures for the company. Once you’ve decided which details to include in your operating agreement, you can begin drafting your document. If you are more comfortable, have a lawyer review it. When you’re ready, have all parties sign the LLC operating agreement.
If you want to amend the agreement later, that’s fine. You can have all members agree to an amendment by signing a written addendum and adding it to the original document.
How Do I Write an Operating Agreement for an LLC?
There are many templates and fill-in-the-blank forms for LLC operating agreements out there. If you’re looking for your standard LLC operating agreement, you can use ours and get your agreement ready to sign.
Or, if you need a document tailored to your LLC, reach out to one of our LegalZone customer support specialists, and we’ll help you draft a bulletproof operating agreement.
What Is the Purpose of an LLC Operating Agreement?
An operating agreement for an LLC eliminates and vagueness surrounding business proceedings. It clearly states how the company will operate and which percentages each member shares.
The operating agreement provides a standard for every LLC member. It helps prevent members from taking advantage of each other or claiming that they didn’t know the protocol.
Does My LLC Need an Operating Agreement?
If your business is in California, Delaware, Maine, Missouri, or New York, then it is required for your LLC to have an operating agreement.
If you live in any of the other 45 states, it’s not mandatory to have an operating agreement for your LLC. However, there are many benefits to creating one, and the contract can help your LLC run smoothly.
What State Should I Make My LLC Operating Agreement For?
Outline your operating agreement following the state laws of the state you filed your LLC in. Each state’s laws will be a bit different regarding operating agreements, so it’s helpful to review their policies before beginning your draft. (Or just ask your lawyer.)
If I Have an LLC Operating Agreement, Do I Need a Business Plan?
Your business plan covers the goals for your company and the steps you’ll take to achieve them. While it’s unnecessary to have a business plan, writing out or discussing your business plan may help clarify the terms you want to include in your operating agreement.
Since your LLC operating agreement will detail how you’ll run your business, your business plan will involve the active steps of running the company. For instance, your operating agreement will outline who gets what percentage of the profits, while your business plan will allocate monetary assets towards a specific advertising campaign.
Unless amended, operating agreements will stay the same; business plans can be altered at any time to follow the ebb and flow of the market.
Generating an LLC Operating Agreement with LegalZone
Setting up an operating agreement for your LLC is a great way to piece together all the moving parts of your new brand. Our LegalZone customer support specialists are ready to assist you and help you decide exactly what you need to include in your operating agreement.
We believe that every LLC should start on the right foot, which is why we make legal documents affordable and accessible. Creating your LLC Operating Agreement with LegalZone is easy—you’ll begin by answering a few questions for us, or you can jump right in and start working on a template. It’s up to you.
Start Your LLC Operating Agreement today with LegalZone.com.