Do I really need an operating agreement for my LLC?

A:

Yes. The operating agreement is a critical document for your LLC, as it outlines the agreement made between the different business partners. A well-drafted operating agreement allows you to set up your financial and working relationship with all internal members. 

Although, right now, it may not seem like any business dispute will arise between you and your business partners, you can never be too sure. This is why it is a good idea to have an operating agreement in place so that when disputes arise, the advanced written agreement will help you resolve finance and management issues. There is a myriad of other things an operating agreement is helpful for, such as spelling out:

• Each owner’s percentage of ownership
• Each owner’s profits or losses
• Each owner’s rights and responsibilities
• Members’ voting powers
• How a departure or addition of a member will be handled
• Other decision-making protocols

The above mentioned items are important to any business and require important decisions to be made ahead of time so that business partners are protected from each other when a dispute occurs. Even if you are the sole owner of your company, it wouldn’t be smart to run your business without an operating agreement in place, as it can help protect your limited liability status and ensure your business is governed by your own rules and not the default rules of the state. 

Planning ahead for your LLC requires an operating agreement. Our Austin business attorneys at the Posey Law Firm can help make sure your operating agreement is drafted to meet the needs of your business and state laws. Contact us today at 888-269-1962 or locally at 512-646-0828 to set up a consultation to discuss your needs.