LLC operating agreement: the engine that drives the car

On Behalf of | Sep 10, 2015 | Business Formation & Planning |

We noted in our immediately preceding blog post that business formation questions often spell front-and-center concerns for start-up enterprises, and for obvious reasons.

After all, the differing business structures provided for under relevant federal and state laws each come with singular benefits and considerations. What is right for one entity might be altogether inappropriate in another case.

We also noted in our September 3 post entry that, regardless of how a business is ultimately defined and structured (whether as a corporation, a limited-liability company, partnership or other type of enterprise), “fundamental concerns will always attach” to key considerations regarding things like liability, ownership, voting rights, buy-sell duties, contract negotiation and review, corporate compliance, entity dissolution and additional matters.

A media overview of the critically important role played by an operating agreement in a limited-liability company drives that point home with clarity. The central thrust in that examination of LLC structures is on the comprehensive manner in which a carefully tailored and drafted operating agreement can promote company transparency and stability.

Indeed, absent such an agreement, there would be no guideposts to safeguard against uncertainty or business breakdown. Confusion would reign across the entire spectrum of business dealings.

As noted in the above overview, an operating agreement serves to “govern the workings of your business,” which is a consideration that is obviously of highest importance. That agreement addresses liability issues, enumerates members’ rights and duties, clarifies ownership percentages, sets forth a business plan and speaks to other business matters.

Fundamentally, and as pointed out in the above media source, having a well-considered and drafted operating agreement in place can help “avoid or alleviate misunderstandings between owners of the LLC.”

A proven business attorney can answer questions regarding an operating agreement and help company principals draft and execute a document that is optimally responsive for their business.

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