![]() ![]() What to Include In Your Operating Agreement An LLC may also choose another LLC or corporation to serve in a management role. ![]() Managers may be selected from among an LLC’s current members or brought in from outside the company. In a manager-managed LLC, members select one or more individuals to serve as on-the-ground management, while retaining authority over major business decisions and operations. However, LLC members can also elect to be manager-managed by indicating this choice in their articles of organization. This means that all LLC members take an active role in the day-to-day operations of the business. The default setting for LLC management is member-managed. State regulations can vary considerably, so be sure to check with your state’s business authority to confirm what, if any, guidelines and requirements exist regarding LLC operating agreements. By drafting a clear and complete operating agreement, members will have somewhere to turn for any issue or item of confusion or contention that may arise in their business. This can include confusion over who has the authority to sign contracts, what happens when a member joins or leaves the business, and how to handle gridlock in decision-making. ![]() Operating agreements are also essential for addressing conflicts that may arise within a business. This can be particularly useful in proving a meaningful separation between a single-member LLC and its owner for legal purposes. Even single-member LLCs are well served by drafting an operating agreement to outline how their business is run. While most states do not require LLCs to have operating agreements, it is highly advisable to do so. In the absence of corporate bylaws, an operating agreement lays out the structure of the company, major procedures and processes, and each member’s role, powers, and responsibilities. An operating agreement is like the blueprint of your LLC. ![]()
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