Limited Liability Companies For Dummies, 4th Edition

Chapter 8

Make It Official! Getting Started on Your Operating Agreement

IN THIS CHAPTER

Knowing the ins and outs of the operating agreement

Customizing the basics of your operating agreement

You’re probably tired of hearing it, but I will say it again — one of the most groundbreaking things about an LLC is its flexibility. Although corporations are subject to a strict legal structure, the options for LLCs are limitless. When you look up your state’s laws surrounding LLCs, the rules are pretty clearly defined. However, one key phrase is usually repeated over and over again — “unless otherwise stated in the company’s operating agreement.” You see, with an LLC, no matter how you choose to be taxed, you can make your own rules. That is where the ever-important operating agreement comes in.

In this chapter, I give you a basic understanding of what an operating agreement is and does and get you started on the bones and structure of the document. Then, throughout the remainder of this book — but especially in the next few chapters — as I help you make certain key decisions, I guide you on how to document those decisions in your operating agreement. By the end of this process, you should have a pretty well-built-out and customized document that serves most of your business’s needs.