Limited liability companies are splendid because of the ease of running the company and tax handling. LLCs do not, however, have any magical statutory structure to guide members in corporate matters between members or when the LLC passes to new owners or heirs. Enter the Operating Agreement.
An LLC's Operating Agreement is the corporate handbook that lays out the rules and procedures that must be utilized in matters such as annual meetings, significant decisions made by the company, admission or dismissal of members, and admission of new members. Like a marriage, nobody starts an LLC thinking it will end in a bitter dissolution. But, like too many marriages, LLCs do end in a bitter dissolution, even LLCs that start out as single member LLCs.
The most prudent course of action when starting your LLC is to get an Operating Agreement in place at the inception of the LLC that protects you and sets the rules and procedures that you want. Use my experience to your advantage and get the Operating Agreement in place now, before you encounter problems in your company.
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