The answer to this question is always “YES.” While the LLC laws of every state may not mandate one in order to have a valid LLC, a limited liability company without an operating agreement is like a country without any laws or regulations.
Without an LLC agreement, the entity may exist but it does not have a personality. There is not one place to show who owns it. . . who can manage it. . . and what it can and cannot do. So, from a practical perspective, an LLC cannot function without an LLC operating agreement.
In addition, it elevates its risk of being disregarded as a separate legal entity in the event of a lawsuit. What this means is that if you are the owner, you are subjecting yourself to being personally liable for business debts, obligations and problems. You run the risk of losing the liability protection that an LLC was meant to provide you.
This risk is called piercing the LLC veil and it is something a court of law can do if the LLC owners and managers act as if the legal entity does not exist. This is another reason, every limited liability company should have a proper operating agreement.
In summary, an LLC operating agreement provides all the fundamental rules and regulations for an LLC business, it reduces the risk of uncertainty and misunderstandings between owners and managers of an LLC, and it buttresses the protection afforded by an LLC.
It is important that you adopt a proper and completed LLC operating agreement for your business. If your business is complicated such as having more than one class of ownership, having professional investors or having members who are subject to conditions and obligations- you should seek the advice of a lawyer to help you prepare you final document.
On the other hand, if your LLC does not have complication, you can start off with a professional LLC Operating Agreement and use it as a starting point to customize it for your business.
If you are a single member, you can get a professional single member llc operating agreement. A single member LLC does not require nearly as much procedure in its document, but it is even more important for it to adopt an LLC agreement as single member limited liability companies are subject to a higher risk of veil piercing.
