Frequently Asked Questions

Is having an operating agreement required by law for an LLC?

While an LLC operating agreement is highly recommended, especially for multi-member LLCs, it is not required by law. An operating agreement serves to ensure the smooth running of a company, particularly in the face of unexpected challenges. It allows LLC members to establish operating rules that best serve their purposes. Without an operating agreement, in the event of a disagreement, the company would have to refer to the default rules of the state, which may not be in the best interest of the company or its members. An operating agreement should include a wide range of information about the LLC, such as the LLC’s name and address, management type, certificate of formation, registered agent and office information, ownership percentage, term of duration, member’s voting rights, business purpose, initial contribution, powers of the members and/or manager, management fees, distribution of losses and profits, company operation, addition of new members, record maintenance, financial and accounting handling, dispute resolution, meeting schedules, contract signing authority, and member exit and competition rules.