Sometimes referred to as an LLC Partnership Agreement or an LLC Agreement, the operating agreement is a critical document for any Li
mited Liability Company (LLC). The purpose of an operating agreement is similar to that of a shareholder agreement; it outlines the rights and responsibilities of each mem
ber of the LLC. Many business owners who need to draft an operating agreement benefit from working with a specialist. If you’re looking for an operating agreement attorney, Philadelphia’s Jeff First is available to help.
In addition to working with an expert, taking time to address the following items in your operating agreement will help your LLC run more smoothly.
Ownership
Your operating agreement should list all the owners of your LLC along with the percentage of the business allotted to them. An owner is anyone who has exchanged any capital contribution, like services, money or property in exchange for a portion of the business. Along with listing the owner’s initial contributions, this operating agreement is also a good place to list the schedule for any potential future capital contributions.
Duties
A breakdown of the duties of each member is also a wise item to include in your operating agreement. Our Philadelphia attorneys can help you draft documents using concise language to accurately describes each of these sections. The more thoughtfully worded your legal documents are, the more useful they will be in the day-to-day management of your business. Review a comprehensive list of our legal services for Philadelphia businesses.
Profits and Loss Distribution
Providing a profits and loss distribution plan at the outset of your LLC is the best way to keep everyone’s expectations managed. Does a majority owner get the largest portion of the year’s profits? Will losses be shared evenly? Discuss these items with your partners and base your operating agreement on mutually agreed upon decisions.
Withdrawal Clauses
Explaining the circumstances by which an LLC owner can withdraw from the business is a smart way to avoid an otherwise stressful situation. Not only detailing when they can remove themselves from the business, but what happens to their portion of the business is key to helping your business succeed during times of uncertainty.
Working with Jeff First, Philadelphia’s Operating Agreement Attorney
If you’re just starting a business or planning to write your LLC’s operating agreement, attorneys at Philadelphia’s trusted Jeff First Law can help. Contact our offices to talk with one of our legal specialists today.