A limited liability company (LLC) operating agreement is a crucial document for any business that wishes to operate as an LLC. This agreement outlines the ownership and management structure of the company, as well as the roles and responsibilities of each member. It defines the rules and regulations for conducting business and helps to protect the personal assets of the owners.
When creating an LLC operating agreement, it can be helpful to have an example to work from. Here is a template for an LLC operating agreement that can be customized to fit the needs of your specific business.
Article I: Formation of the Company
This section outlines the name and purpose of the company, as well as the date of formation and the state where it was organized.
Article II: Members
This section outlines the names and addresses of all members of the LLC, as well as the percentage of ownership for each member. It also defines the rights and responsibilities of each member, including voting rights and the ability to transfer ownership.
Article III: Management
This section outlines how the company will be managed. It can either be managed by its members or by a designated manager. It defines the powers and duties of the manager or managers and outlines how decisions will be made within the company.
Article IV: Capital Contributions
This section outlines the initial capital contributions made by each member and the process for making additional contributions in the future.
Article V: Profits and Losses
This section outlines how profits and losses will be allocated among members. It can either be based on ownership percentage or a different allocation agreed upon by all members.
Article VI: Distributions
This section outlines how profits will be distributed among members. It can be done on a regular basis or at the end of the fiscal year.
Article VII: Transfer of Membership Interest
This section outlines the process for transferring membership interest to another person or entity. It defines the rights of existing members to approve or disapprove of the transfer.
Article VIII: Dissolution
This section outlines the process for dissolving the company. It defines the steps that must be taken and how any remaining assets will be distributed among members.
Article IX: Notices
This section outlines how notices will be sent to members. It defines the preferred method of communication and outlines the requirements for sending notices.
Article X: Amendment
This section outlines how the operating agreement can be amended. It defines the process for making changes, including the number of votes needed to approve the amendments.
By using this LLC operating agreement example as a guide, you can create a customized agreement that suits the specific needs of your business. Remember, the operating agreement is a crucial document that helps to protect the personal assets of the owners and defines the rules and regulations for conducting business. It should be carefully crafted and reviewed by all members of the LLC.