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Q.Do I need an Operating Agreement?
A.To validly complete the formation of the LLC, the members must enter into an Operating Agreement. This Operating Agreement may come into existence either before or after the filing of the Articles of Organization, and may be either oral or in writing in many states.
We suggest EVERYONE enter into a written Operating Agreement that at a minimum contains the following:
- Whether the LLC is Member or Manager Managed;
- The numbr of members;
- The member's duties, rights and obligations;
- The member's voting interests;
- The method for choosing managers, their terms, duties, and salaries;
- The method for calling meetings, and the time and place for meetings;
- The Capital Structure and Financing Mechanisms;
- The profit and loss distribution;
- The record keeping procedures;
- The member's withdrawal and termination rights;
- The member's right to sell or transfer Membership Interests; and
- The duration (life) of the LLC.
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