As a business owner, one crucial document you need to have in place is an operating agreement. This document outlines the management and ownership structure of your company, including each member`s rights, responsibilities, and obligations. If you`re looking to form a limited liability company (LLC), you need an operating agreement to protect your personal assets and maintain tax benefits.
In this article, we`ll walk you through the steps on how to sign an operating agreement for your LLC.
Step 1: Draft your operating agreement.
The first step in signing an operating agreement is creating one. You can either hire a lawyer to draft one for you or use an online service to generate one. When drafting an operating agreement, ensure that it meets the legal requirements of your state. You should also include the following aspects:
– Company name and address
– LLC`s purpose
– Management structure
– Member ownership percentages
– Allocation of profits and losses
– Dissolution provisions
– Voting procedures
– Capital contributions
– Transfer of ownership
Step 2: Review and revise your operating agreement.
Once you have a draft of your operating agreement, review it carefully with all members of your LLC. Make sure that everyone agrees with the terms and conditions outlined. If any changes need to be made, now is the time to make them. Once everyone is satisfied with the agreement, finalize it, sign it, and notarize it.
Step 3: Collect signatures from all members.
After finalizing your operating agreement, you should collect signatures from all the members of your LLC. Make sure that each member has a copy of the agreement and understands the terms and conditions outlined in it. Each member should sign the agreement and include their printed name, date, and signature in front of a notary public. This formalizes the agreement and makes it legally binding.
Step 4: Store your operating agreement safely.
Finally, you need to store your operating agreement safely. Keep the original signed agreement in a secure location, such as a safe or a fireproof cabinet. Each member should also have a copy of the agreement, which they can access easily. You may also want to keep a digital copy of the agreement in the cloud, so you don`t lose it.
In conclusion, having an operating agreement is essential for any LLC. It protects the interests of the members and outlines the management structure. Creating and signing an operating agreement is a simple process that can be done quickly. Just ensure that you follow the legal requirements of your state and that all members review and agree with the terms and conditions outlined. Once signed, store the agreement safely and keep a copy of it for each member.