As an aspiring entrepreneur, forming a Limited Liability Company (LLC) is one of the most important decisions you will make in starting your business. One crucial document you need to have is an operating agreement. This document outlines the structure, management, and financial responsibilities of your LLC. In this article, we will provide an example operating agreement for an LLC.
Before diving into the example operating agreement, let`s first define an LLC. An LLC is a business structure that combines the limited liability protection of a corporation with the tax advantages of a partnership or sole proprietorship. This means that the LLC`s owners or members are protected from personal liability for the LLC`s debts and obligations.
Now, here is an example operating agreement for an LLC:
Introduction
This operating agreement is made and entered into by and between [Name of LLC] (the “Company”) and its Members. The purpose of this Operating Agreement is to set forth the management, financial structure, and other policies and procedures of the Company.
Membership
The Company shall have [number of members] members. The initial members of the Company are listed in Exhibit A attached to this Operating Agreement.
Management
The business and affairs of the Company shall be managed by [Manager-managed or Member-managed]. If Manager-managed, the Manager(s) shall be appointed by a majority vote of the Members. If Member-managed, the Members shall have equal rights in the management and conduct of the business of the Company.
Voting
Each Member of the Company shall have one vote on all matters submitted to a vote of the Members. Decisions shall be made by a majority vote of the Members. In the event of a tie vote, the Manager(s) shall cast the deciding vote.
Capital Contributions
Each Member shall make an initial capital contribution to the Company as set forth in Exhibit A. Additional capital contributions may be required as determined by a majority vote of the Members.
Profit and Loss
Profits and losses shall be allocated among the Members in proportion to their ownership interests.
Distributions
Distributions of profits and losses shall be made to the Members on a pro rata basis in proportion to their ownership interests. Distributions shall be made at least annually.
Transfer of Membership Interests
No Member shall transfer or assign his or her membership interest in the Company without the prior written consent of a majority of the Members.
Amendments
This Operating Agreement may be amended only by a written instrument executed by all the Members.
Conclusion
This example operating agreement for an LLC provides a basic outline of the important provisions that should be included in your operating agreement. It is important to note that every LLC is unique, and your operating agreement should be tailored to the specific needs and circumstances of your business.
This operating agreement serves as a guide for the formation and management of your LLC. Be sure to consult with an attorney experienced in business law to help you create a comprehensive and legally binding operating agreement that will set your LLC on the path to success.
