Why Does an LLC Need an Operating Agreement?
Having an LLC operating agreement could be one of the most important documents that you create for your company. Although it isn’t legally required, it is very beneficial to have such an agreement. An operating agreement is like a prenuptial agreement for your business, and it’s never too late to create one.
What Does an LLC Operating Agreement Do?
Having a thoroughly prepared LLC operating agreement will give the owners additional control over how certain issues are handled as well as the way in which outcomes are achieved. It will also provide certainty and stability for business operations and may possibly prevent some significant problems in the future. An operating agreement also helps outside members of the LLC such as investors, banks, and future members, because they will know what the internal rules are for your business.
One Size Doesn’t Fit All
When it comes to LLC operating agreements, a one-size-fits-all approach won’t cut it. Having an operating agreement will allow you to modify, change, and customize the rules that automatically apply to all Florida LLCs by default. You can use the agreement to determine how you want to handle internal affairs as well as the liability of each member when it comes to obligations, debts, and other liabilities. You can easily make your own rules and alterations for your operating agreement.
Do Single Member LLCs Need an Operating Agreement?
Single member LLCs often go without an operating agreement, but you should know that even single member LLCs will benefit from having operating agreements. An operating agreement can act as a persuasive and informational tool for present and future stakeholders, banks, and investors. Using the operating agreement’s ability to change default laws can also be to your advantage.
Using Operating Agreements for Difficult Situations
During challenging situations, an LLC operating agreement can act as a protocol to make sure that your wishes for your company are carried out the way that you intended them to be. It is never good to be forced into creating a response to an emergency situation in the middle of the emergency when emotions are running high.
Creating an operating agreement will allow you to think about potential issues that could arise and the best way to handle those issues before they ever arise. You will also be able to lay out resolutions to situations such as the death or divorce of a member.
Contact a Florida Business Attorney to Assist You
If you compare the benefits of having an LLC operating agreement, they far outweigh any possible arguments against having such a document. If you decide an operating agreement is best for your company, involving a Florida business planning attorney who can assist you in preparing the agreement will be beneficial to you and your business. David Toback has decades of experience helping business owners plan and prepare for all their business needs. Contact him today to schedule a consultation.
Resources:
flsenate.gov/Laws/Statutes/2013/605.0105
leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0600-0699/0605/Sections/0605.0410.html
