Categories: Resources

Operating Agreements

Small Business Solutions

What is an Operating Agreement, and do I need one?

If you are looking to start a business or already have one, it is crucial to have a strong and detailed operating agreement.

An Operating Agreement is a governing document for a Limited Liability Company (LLC). This agreement is extremely important, it helps to dissect the inner workings of your business. All LLC’s must have this documentation especially if the business has more than one owner.

The Operating Agreement should answer questions such as:

  • How much money is going to be contributed by the owners?
    • How and when the cash distributions will take place to the owners?
    • Who will be the manager and what will their authority level look like?
    • What votes or issues need to be decided on by the owners/members?
  • What will be the provisions regarding a sale of an ownership?
    • How will disputes be resolved?

Next you may be asking, “How do I write this agreement?”

The answer is our world today provides many resources to be able to write the perfect and most detailed operating agreement. However, it is highly recommended that you consult with an attorney.

This does not mean you just hand it off and let them figure it out – it is essential to be a part of the process. Be sure to fully understand the document before it is passed on and signed by all parties involved. If cautionary steps are not taken in the beginning, it may cause nothing but problems down the road.

hollie bourne

Recent Posts

Your Accountant Is Going to Ask You for W-9s in January. Here’s How to Never Have That Conversation Again.

Every January, business owners chase contractors for W-9s they should have collected months ago. The…

2 days ago

Can You Make Payroll on the 15th? The 13-Week Cash Flow Forecast Answers That Every Monday.

The one report every business owner should see weekly: a 13-week cash flow forecast built…

3 days ago

Your Q3 Estimated Tax Payment Is Due September 15. Here’s How to Know If the Number Is Right.

Third-quarter estimates are due September 15. Most business owners pay last year's number divided by…

5 days ago

You Own Three LLCs and Pay for Everything From One Card. Here’s What It’s Doing to Your Books.

Separate LLCs only protect you if the money stays separate. What happens when one entity…

1 week ago

Filed an Extension This Year? Here’s Why (and How to Make It Your Last)

Most extended business returns aren't a tax strategy. The books weren't ready in March. What…

2 weeks ago

Bookkeeper, Controller, or CFO? What Your Business Actually Needs (and When)

Somewhere between your first hire and your first million, the finance question changes. It stops…

2 weeks ago