Operating Agreement for LLC – Why Have One?

Many LLC owners mistakenly think that because they might be the only owner or because their LLC only has a simple structure, there is no need for an operating agreement for the LLC.

This could not be further from the truth. Having a proper and customized written operating agreement can reduce your chances of being sued or your LLC facing legal disputes by over 60%.

Two of the biggest lawsuit risks that LLC related ventures face include (i) a predatory lawyer trying to get the LLC to be disregarded so that all owners will be personally liable for a lawsuit and disagreements and (ii) problems between members themselves.

In both cases, having a formal written operating agreement will reduce the risk and costs of litigation. The agreement is written evidence that the limited liability company is its own independent entity and provides strong support for maintaining limited liability of its members.

This document also outlines the rights and obligations of the members of the LLC and the voting procedures. Without one, members can later disagree on how the LLC should be run or what rights each member has and without an official document addressing these issues, the only option is expensive negotiations with lawyers or even a lawsuit.

Always have an operating agreement for LLC matters.

The LLC Expert offers state specific form LLC Operating Agreement and a single member LLC Operating Agreement package. These are professional forms that can be used as a starting point for customizing a proper document for your LLC.

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