LLC Operating Agreement
LLC Operating Agreements. Fast, Easy, Online in 1 hour for Only $49.97. The operating agreement for an LLC (limited liability company) is similar to the bylaws of a corporation. Creating an operating agreement is important to limit your personal liability for business debts, even if you’re the sole owner (“member”) of your LLC.
What does an LLC Operating Agreement include?
The LLC Operating Agreement has information about the LLC itself, including the name, description of services, signing details for the LLC, and office address.
The LLC agreement includes the following information for each member:
- Name and address
- Membership class
- Capital contribution
- Percentage of ownership
- Share of profits and losses
An operating agreement also addresses whether a member can voluntarily leave the LLC if they can compete against the LLC after leaving, how assets are distributed if the company dissolves, and how new members are admitted.
An LLC Operating Agreement specifies how the company will be managed, including how decisions will be made and if actions require a majority of members to vote in favor of decisions (referred to as unanimous consent).
Regular meetings are part of an LLC’s obligations, which is why details regarding where and when meetings will be held are important to include in the operating agreement.
An LLC can be managed either by a managing member (or members) or a designated manager(s).
Financial and administrative aspects of an LLC are defined in the operating agreement, including the LLC’s accounting methods, fiscal year, annual report details, and more.
The questionnaire for LawDepot’s LLC Operating Agreement allows you to choose how the company will be classified for tax purposes: either as a disregarded entity or a corporation.
A disregarded entity means that the Internal Revenue Service (IRS) treats a single-member LLC similarly to a sole proprietorship, which is when the company is not addressed separately from its owner for tax purposes.
A corporation means that the LLC will be taxed at the company level, and each member is responsible for paying income tax on any distributions.
Generally, an LLC which has at least two members is, by default, treated as a partnership for tax purposes, but it can elect to be taxed as a corporation.
Other Details in an LLC Agreement
The operating agreement may also specify who has the ability to sign contracts on behalf of the company and methods used to resolve disputes.