Difference Between LLC Agreement and Operating Agreement
An operating agreement outlines internal operations like financial decisions, while an LLC agreement registers the business with the state.
Do You Need an Operating Agreement for an LLC?
Having a written operating agreement benefits LLCs by defining operations clearly.
Writing a Simple Operating Agreement
An Operating Agreement outlines how an LLC will be managed financially and operationally. It spells out member ownership percentages and capital contributions determining profit/loss distribution and voting rights.
Should I Write My Own Operating Agreement?
A written operating agreement is a legal contract drawn up when forming a limited liability company (LLC). This agreement defines rules, processes, and provisions governing internal operations. Operating agreements differentiate LLCs from sole proprietorships, protecting personal assets. Written operating agreements are required in all fifty states to form an LLC.
Filling Out Your Agreement:
- List members and managers.
- Define ownership percentage and capital contribution amounts determining distribution of profits, losses, and voting rights.
- Describe management structure – whether member or manager managed, voting, and decisions.
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Include provisions protecting managers from member pressure about decisions.
Multi-member agreements cost more.