Establishing an LLC
Articles of Organization establish an LLC’s existence under state law. The Articles of Organization typically require basic information about the LLC, such as name, address, registered agent, and members. While Articles of Organization are required by state law to form an LLC, they are a public record and can be accessed by anyone who wishes to view them. They serve as a legal declaration that the LLC has been established and is operating in compliance with state laws.
Operating Agreement
An Operating Agreement provides more specific operational details, such as management, voting rights, profit distribution, and other operations. Operating Agreements are not filed with the state like Articles of Organization. Instead, it is an internal document that acts as a binding contract between LLC members. It outlines ownership and operations, including member contributions, accounting, structure, and ranking, and is more easily amended than Articles of Organization.
Your Operating Agreement is one of the most important documents for your business. It is a contract between the LLC’s members or managers that sets forth the rules and regulations that govern the company’s management and decision-making processes.
Operating agreements, also known as a key document used by limited liability companies (LLCs), are legally binding. Courts uphold their provisions when disputes arise. An operating agreement is mandatory as per laws in only 3 states: California, Missouri, and New York. In other states, they govern LLCs lacking such agreements.
Who Needs an Operating Agreement?
- LLCs in California, Missouri, and New York must have them.
- In other states, they govern LLCs lacking such agreements.
- Sole proprietorships, partnerships, and S-corporations can also benefit.
Key provisions in an Operating Agreement cover percentages, contributions, profit-sharing, and roles. This agreement can be created when starting a business but can be amended at any time through approval.
Joint Operating Agreement (JOA)
A JOA governs collaboration between oil and gas companies. It enables separate identities while working jointly under rules. The operator leads exploration and production, while other signatories bear less responsibility.