An operating agreement is one of the most important legal documents for small businesses, especially LLCs. Here’s why you need one.
What is an Operating Agreement?
An operating agreement outlines the ownership structure, roles, and operational procedures of an LLC.
Key Benefits of an Operating Agreement:
- Protects Your LLC Status: Establishes the LLC as a separate legal entity.
- Defines Ownership Percentages: Avoids disputes between members.
- Outlines Profit Distribution: Clarifies how earnings are divided.
- Provides Exit Strategies: Specifies processes for member withdrawal or dissolution.
Do I Need an Operating Agreement if I’m a Sole Proprietor?
Yes! Even single-member LLCs benefit from having an operating agreement as proof of their legal status.
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