If you run an LLC, you likely have quite a few questions about creating an operating agreement. Not every LLC will need one of these, but nine times out of 10 it's best to have such an agreement in writing for your company. So what should be included in an LLC operating agreement?
An operating agreement will help to determine the ownership of the LLC. For example, if one partner wants to build the shares of ownership differently than how a partner invests in it, it should be defined in the operating agreement.
The responsibilities and rights of the managers and members of your LLC must be outlined in the operating agreement. For the most part, the members of the LLC are the ownership group.
The owners can then elect a manager to run the LLC on a daily basis. The certificate of formation for the LLC should have a section that specifies if your company will be directed by the manager or the members.
Your operating agreement must also include an explanation of how profits and losses are distributed. For the most part, the profits of an LLC are filtered through the company to the ownership.
How will your LLC change ownership? This is an important question that should be answered in an operating agreement. If there are multiple owners within the LLC, you should define in the agreement how the company will continue to operate should one owner decide to leave.
Are you preparing to create an operating agreement for your LLC in Morristown? Speaking with an experienced business law attorney can help you understand the process and make it easier for you to create such an agreement.
Source: allBusiness, "5 Things You Need to Include in Your LLC’s Operating Agreement," accessed Nov. 03, 2017