Operating Agreement

Operating agreements for LLCs should be flexible. These agreements can have broad modifications in the future. The rule is that the changes to the agreement are allowed in most cases, provided they do not contradict internally or violate the official LLC Act. When creating your operating agreement, you can do it yourself or hire outside assistance. If you hire a service, you will have the option of using a pre-created template with minor personalization or having an attorney create a custom one. Obviously, the latter will cost more, but it will also be more specific to your needs.

Be sure that if you do create your operating agreement – which you should, that every member signs it. You do not need to have each member sign the same exact copy. It is possible to use multiple physically separate copies as long as every member has signed one. This allows for the simplicity of each member printing and signing a copy before submitting it. That saves on the time spent and postage fees.

If operating agreements prevent conflict, you may wonder if single-member LLCs actually need them. After all, you cannot sue yourself for profits or liabilities. Despite this, the presence of an operating agreement helps your LLC maintain its professional appearance. It is a corporate formality that will assist your reputation.

There is also the fact that many banks ask LLCs for operating agreements when opening accounts. You will likely eventually find a bank that lets you open an account without one, but it will be a hassle. Do not forget to consider what happens if something happens to you. If there is no operating agreement or trust, the LLC will likely be probated. An operating agreement can prevent this by naming a beneficiary.