Small firm attention, big firm results

  1. Home
  2.  | 
  3. Business Litigation
  4.  | Everything you need to know about LLC operating agreements

Everything you need to know about LLC operating agreements

On Behalf of | Sep 27, 2022 | Business Litigation

If you have decided to form a limited liability company (LLC) in Tennessee, then you will need to prepare an LLC operating agreement. This document is extremely important, as it will help make work regarding your business much smoother while protecting you in the event of any legal disputes.

What is an LLC Operating Agreement?

An LLC operating agreement is a legal document that outlines the ownership and management of your business. You can use this agreement to determine how your business will run, and will help to resolve any disputes that may arise between the members of your LLC. For instance, your operating agreement can outline, per business law, what happens if one member wants to leave the business, or how new members can be brought.

It is important to note that LLC operating agreements are not required by all states; however, they are highly recommended. Even if your state does not require an LLC operating agreement, it is still a good idea to create one. This is because an LLC operating agreement can provide your business with a great deal of protection.

How can it protect your business?

If you have an LLC operating agreement in place, then it can serve as evidence of your business’s formation. This is important because, without this document, it may be difficult to prove that your business is a separate entity from its members. Additionally, an LLC operating agreement can help to protect your business from personal liability. This means that, if your business gets sued, the members of your LLC will not be personally responsible for the debts of the business.

How should you prepare your LLC operating agreement?

First, you will need to determine the structure of your business. This includes deciding on the number of members that your business will have, as well as their roles and responsibilities. Next, you will need to decide how your business will get managed. You will also need to determine what happens in the event that a member leaves the business, or if the business is dissolved. Finally, you will need to decide on the terms of your agreement. This includes deciding how long the agreement will last, and what type of arbitration will be used in the event of a dispute.

Once you have decided on the above mentioned points, you will need to put your agreement in writing. Once your agreement is complete, be sure to have all of the members of your LLC sign it.