Many business owners often times feel that the filing of the Articles of Organization is the final step to formalizing their business entity. There is the additional step that is suggested to formalize the rules that will govern the relationships between individuals within the entity and also how to manage the affairs of the business. This can be accomplished through the organization’s Operating Agreement.
Operating Agreements are used by Limited Liability Companies (LLC) that serve as an agreement between the members of the LLC and when combined with the Articles of Organization provide for the governing of the entity. The Operating Agreement should be drafted to contain such provisions that include, but not limited to:
- Relations among members and other members and their defined rights within the LLC;
- Rights and duties of a person acting in the capacity of a manager;
- Activities of the company and the conduct of those activities; and
- Means and conditions for amending the Operating Agreement.
It should be noted that any person who becomes a member of any LLC is deemed to assent to the Operating Agreement. The Operating Agreement does not have to be filed with the Secretary of State in conjunction with your Articles of Organization. However, when there are multiple individuals involved within the business venture, it is wise to have a general understanding of the governing provisions of the entity when filing the Articles of Organization.
If you would like to have your Operating Agreement drafted, amended or reviewed do not hesitate to contact the legal team at Maitland & English Law Firm, PLLC.