Does my LLC Need an Operating Agreement?

Establishing your limited liability company (LLC) can be an exciting experience. This business structure gives you flexibility and personal protection that sole proprietorships and partnerships cannot provide.

However, a limited liability company without an operating agreement is an incomplete business model. An operating agreement is essential for all LLCs, and your business can benefit from having this document.

If you need assistance creating an operating agreement, an Ennis business attorney from Foster Massengill, PLLC, can help.

What is an LLC Operating Agreement?

This is a binding contract between a limited liability company's members outlining the business's operational and financial decisions. This includes the rights and responsibilities of its members, distribution of profits and losses, operations and management, rules and regulations, and other provisions. Operating agreements can be tailored to suit a general LLC, and courts will usually recognize them.

Why Do I Need an Operating Agreement?

A well-crafted operating agreement is critical to any multi-member LLC. It defines each member's fiduciary duties and responsibilities and addresses important issues such as voting procedures, capital contributions and distributions, and dispute resolution.

This document also helps protect the interest of each member by providing a legal framework that governs how the LLC operates. Without it, members of an LLC business are subject to the default rules set forth by Texas' default LLC laws.

What If I Do Not Get an Operating Agreement?

Without an operating agreement, you will need to reference the Texas Limited Liability Act to manage your business. The statutes under this act will govern your LLC's formation, management, structure, and operation.

This means that you must consult the laws to ensure you are using the appropriate procedures to take any action. You should avoid these generic statutes because they may not consider the specific needs of your business.

A tailored, well-written operating agreement that addresses your company's requirements and the members' visions can protect you from litigation and operational disruption. It can also help avoid member disputes and act as a binding contract between the LLC members.

How an Ennis Business Attorney Can Help

An Ennis business attorney can provide invaluable assistance in crafting an effective operating agreement in Texas. They can help review existing legal frameworks and suggest changes to better suit your LLC business model. An attorney can further advise you of any potential legal risks associated with your operating agreement, considering relevant laws.

Contact Foster Massengill Today

The business attorneys at Foster Massengill, PLLC, will provide the legal assistance you need to develop your LLC operating agreement. To schedule a consultation with our lawyers, call (972) 937-1616. You can also contact us online to learn how JD Foster can help you establish a successful LLC in Texas.