Many LLC owners ask me whether or not it is necessary for them to have an Operating Agreement for their LLC. After all, in most states, a written Operating Agreement is not required to have an official and proper limited liability company.
This is the one question I will always answer the same regardless of who is asking. You must always have a written Operating Agreement for an LLC business. There are several reasons for this.
First, having an operating agreement buttresses your liability protection. It is a solid sign that the LLC is an entity separate and apart from owners which is a necessity to preserve the liability protection shield.
Second, having an operating agreement for an LLC reduces the risk of member disputes. By having a well written operating manual for the LLC (which is what an operating agreement is in most cases), the members, managers, officers will have certainty when it comes to running the LLC business.
Third, many third parties will insist that the LLC have a written operating agreement, Make it easier to do business with others (like banks, vendors, service providers, etc.).
Fourth, the operating agreement serves as a users manual or roadmap for operating the business. The process of creating and customizing one for your LLC business and discussing it with any necessary parties is an effective business planning tool.
The creation of an Operating Agreement for your LLC is one area where getting the advice of an LLC attorney is well worth the cost.
If costs are an issue, consider a legal membership plan where you can at least get a contract review by a business attorney or, at the very least, insist on obtaining a professional operating agreement form drafted by LLC knowledged professionals as a starting point for the do-it-yourself business owner.
