You want to know how to write an LLC operating agreement and we’re going to walk you through how to do it step-by-step.
Starting right about…now!
A quick disclaimer that this is not legal advice, and you should get your operating agreement checked by an attorney of your choice.
What is an Operating Agreement?
An Operating Agreement is a legally binding document that outlines in detail the rights and responsibilities of the members of the LLC and how the business will operate.
Some states don’t require you to have an Operating Agreement but we suggest you always create one to minimize any misunderstandings and disputes.
Why is it Important?
Operating agreements, make it very clear how the business will operate and can be referenced later in times of uncertainty such as:
- member withdrawal,
- equity and distribution split,
- signing of contracts,
- member death,
If you do not have an Operating Agreement, the default LLC rules of your State will apply which may differ from what you have in mind for your business.
How to Create Your Business’ Operating Agreement
So now that we understand what an operating agreement is and its importance, let’s walk through a template to help you write one for your company.
This will be a good starting point for your own operating agreement as it includes most, if not all, clauses recommended in most agreements.
If you want to learn (you probably do!) how to write your own Operating Agreement, then scroll up as we shared a walk-through guide in the video at the top of this post.
If things change in the future or you want to add-on to your operating agreement, you’ll be happy to know that Operating Agreements can be amended, if every member agrees and signs the amendment.
However, we would definitely get the agreement looked at by an attorney just in case you miss something specific to your type of business and/or State.
So if you have an LLC, or are thinking of establishing one, you might want to learn more about it. If you do, then check out these posts next:
And if you need help with your business taxes, accounting, or financial management, give us a call today. We’d be happy to help you!