LLC Operating Agreements: What to Include
The internal rulebook that governs ownership, control, money, and exits.
What is an operating agreement for a limited liability company (LLC)?
An operating agreement is the internal contract among an LLC's members that sets the rules for how the company runs. State law provides only bare defaults, so the operating agreement is where the owners actually decide how ownership, control, money, and exits will work.
What it should include
- Ownership and capital — each member's percentage and contributions;
- Management and voting — who decides what, and by what threshold;
- Distributions — how and when profits are paid out;
- Transfers and exits — a buy-sell mechanism for a member who leaves, dies, or is bought out; and/or
- Dispute resolution and dissolution.
Why it matters most when things go wrong
A good operating agreement rarely gets read while everyone is getting along — its value shows up in a dispute, a departure, or a sale, when it decides the outcome. A missing or generic agreement is where partner disputes turn into litigation.
How Nochumson P.C. helps
Nochumson P.C. drafts operating and governance agreements that fit how the owners actually run the business. Contact us to put yours in place.
Related articles:
- How to Start an LLC in Pennsylvania
- S-Corp vs. LLC: Which Is Right for Your Business?
- Partnership Agreements: Key Provisions
- Buy-Sell Agreements for Co-Owners
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