Why You Need an LLC Operating Agreement
LLCs are an excellent choice for creating your new business, given the flexibility associated with their structure.
Limited Liability Companies (LLCs) are an excellent entity choice for creating your new business, given the flexibility associated with their structure. However, this flexibility can easily create legal pitfalls for LLC members unless they actively take steps to avoid them. That’s where we can help. Our process begins with an informal “discovery session” with company principals where we actively listen to their specific goals, desires, and business plan strategies. We are then able to draft a comprehensive, custom-tailored Operating Agreement to protect their interests. An LLC Operating Agreement will often include important matters such as:
- Who owns what percentage of the LLC
- How the LLC will be managed
- What the rights and responsibilities of each Member are in operating the business
- What restrictions on the sale and transfer of membership interest will be in place, and when they will take effect
- What happens in the event of the death or incapacity of a Member
- How a member can “buy out” another member, or choose to sell their membership interest to a 3rd party (often called “Buy/Sell” provisions)
- How the LLC will be taxed and when members can take profit distributions
Whether you are starting a new business or have been operating for years, it is crucial that you develop an Operating Agreement for your LLC.