Create Your Own Custom
LLC Operating Agreement
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Dear Entrepreneur,
Did you file your own LLC or use a basic service that simply filed it with the state and that's all you did? If so, your LLC may be a ticking TIME BOMB! You could end up with a legal or tax disaster without a good LLC operating agreement.
What is an Operating Agreement and Why Do I Need One?
An operating agreement is similar to the Bylaws of a corporation, in that they identify the operating rules of the company and its players (members and managers).
LLCs need an operating agreement for many different reasons:
- Identify the Managers and Members. In most states, the articles of organization you file with the state do NOT list the names of the members and managers. Thus, you will need an operating agreement to clearly identify who the parties are.
- Open a Bank Account. 99% of banks will NOT let you open am account for your LLC without an operating agreement
- Spell Out the Authority of the Manager(s). If you have a manager-managed LLC, you will want to CLEARLY spell out what he or she (or they) can do on their own and what requires a vote of the members.
- Asset Protection. Without the proper clauses, a creditor may be able to attach a member's interest with a judgment and become a substitute member with VOTING rights. A properly prepared operating agreement with address this issue to prevent it from happening.
- Identify Members' Rights. Suppose you have more than one member of the LLC... what are their rights to profits, voting, and other issues? By default, a member’s vote is generally equal to his membership share, which is in turn determined by his capital contributions. But the members may want more than a majority vote required for certain company actions, such as dissolution or bringing in new members. You may want to require a unanimous vote for such actions. The point is that you will want to address these issues in an operating agreement.
- Buyout Agreement. What if one member dies, goes bankrupt, wants to retire, etc? These special circumstances should allow the other members to buy out the member who is in trouble or wants out, but you need to put all of this in writing!
- Transfer of Membership Interest. Can a member transfer his ownership share to a third party without the consent of the other members? If so, do the other members get a right of first refusal to purchase those shares? This should all be spelled out in the operating agreement.
- Disputes. How are disputes between the members handled? Is mediation and/or arbitration required instead of going to court? This should all be spelled out in the operating agreement.
- Maintenance of Capital Accounts. If you are electing to have your LLC taxed as a partnership, then you should have provisions that call for the creation and maintenance of “capital accounts”. What are capital accounts? They are an essential cornerstone of partnership taxation; capital accounts keep track of each member’s equity in the company. They measure contributions and distribution of members’ capital and allocations of profit and loss to each member’s equity account. The operating agreement should lay out how capital accounts are maintained.
- Transfer on Death Designation. Most states allow a "security" (ie, a membership interest) to transfer on the death of a member to a third party AUTOMATICALLY instead of through a will. Even if you are just a one-person LLC, this can be a CRUCIAL clause to have in your operating agreement.
- Dissolution of the LLC. If there are two members of the company filing as a partnership for tax purposes and one partner dies or retires, the company ceases to exist in the eyes of the IRS, because it is no longer a partnership. But, the remaining member can have the right to continue the company as a single-member LLC. This should all be spelled out in the operating agreement.
- Indemnification of Members/Managers. If a manager or member of the LLC is sued for activities that he engaged in on behalf of the company, will the company (and the other members) pay to defend him? Should there be exceptions if the manager or member engages in gross or unlawful misconduct? This should all be spelled out in the operating agreement, PARTICULARLY if YOU are the manager and investing other people's money!
These are just a few of the issues that a good operating agreement should address. There are many more and it could take you MONTHS of research to learn what you don't know that you don't know about LLC operating agreements. This is why lawyers charge big bucks to create them for clients.
Create Your Own Operating Agreement
for a FRACTION of the Cost of a Lawyer!
You can pay a lawyer $1,000.00 or more to create a good operating agreement for you, or you can create you own LLC Operating Agreement by answering some simple questions, and VOILA, the agreement is automated created for you! Whether you are a single-member LLC, husband and wife, or a partnership, you can create your own customized LLC Operating Agreement by answering some simple questions, and instantly receive the completed document in editable MS Word format.
Through the power of technology and good legal work, you can create your own LLC operating agreement online in minutes. Simply choose the type of LLC you have and answer some simple questions, and VOILA, the agreement is automated created for you in editable MS Word format.
Special Introductory Pricing!
Attorneys charge upwards of $1,000.00 or more to create an operating agreement for you, but through this special introductory offer, you can create your own in minutes for the low price of just $197.00 $97.00! This special won't last for long so hurry before the price goes up!
As a reward for taking BOLD action today, we'll include three very special bonuses:
BONUS 1: Dozens of Sample LLC Resolutions. Included with your purchase are dozens of sample resolutions for various actions the LLC can take, such as opening a bank account, making a loan, borrowing money from a member, leasing an office, changing or adding a manager, taking a membership distribution, and many, many more!
BONUS 2: Membership Certificate Template. Corporations generally issue stock certificates to its owners, but did you know an LLC can do the same thing? Yes, your LLC can issue membership share certificates to its members, and included with your purchase is a PDF membership certificate template to fill-in and print!
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