LLC business owners understand the importance of forming an LLC in order to receive limited liability protection and get the tax and other benefits of an LLC. However, many of these owners form their LLC and then forget about the LLC Operating Agreement.
Formation under state law is only the first step in completing the LLC organization. Do not forget to put an LLC Operating Agreement in place for your LLC. how to dissolve an LLC
Purpose #1: The LLC Operating Agreement Establishes Ownership of the LLCDid you know that when a limited liability company (commonly known as an LLC) is formed under a state’s law, the LLC does not have any members (owners) unless the members are specifically listed in the Articles of Organization?Because most state LLC laws do not require that the members of the LLC be stated in the Articles of Organization, 98% of new LLCs do not have members right after formation.The most common way to issue ownership interests in an LLC is through the LLC Operating Agreement. So, the most important purpose of an LLC Operating Agreement is to establish the owners of the LLC and determine what rights and obligation the Members of your LLC have to each other and to the LLC.You and your LLC’s other members should not rely on oral agreements as to who owns how much in the LLC and who has what percentage of votes. You do not want to find yourself in a situation where your LLC is making a lot of money and one of your members then claims he/she owns more of your business!