The Not-So-Silent Partner: Why Your LLC Needs an Operating Agreement

It is always an exciting, positive, and collaborative experience when you first start a business with a friend or a trusted colleague. Everyone is on the same page, and enthusiasm is high. But what happens when you eventually disagree on what should happen next, or who is ultimately in charge?

Without a clear roadmap, a simple business disagreement can quickly escalate into a major conflict.

What Happens If You Don’t Have an Operating Agreement?

If you choose not to create a formal Operating Agreement, your business must default to your state’s laws. While state laws do provide some basic guidance, they are generic and may not align with your specific goals. Beyond that basic state guidance, a lack of clear, written rules means you will likely end up in court trying to resolve disputes with your friend or colleague.

Take Control of Your Business from the Beginning

An Operating Agreement changes everything. It is a powerful document because it:

• Covers all contingencies: It outlines exactly what to do when unexpected situations arise.

• Modifies state laws: It allows you and your partner—rather than the state—to dictate the rules.

• Establishes clear control: You can decide from the very beginning how the business is to be run and how it will move forward.

Your Operating Agreement does not have to be overly complicated. It can be relatively simple, or it can be comprised of highly detailed decision-making details depending on your unique business needs.

Protect Your Business Relationship Today

The absolute best time to write an Operating Agreement is while things are good. By working with a business attorney to lay the groundwork now, you can protect your partnership and completely avoid a costly court battle if bad times or disagreements arise in the future.

Don’t leave the future of your company up to state defaults. Contact Moseman Law Office today to draft an Operating Agreement tailored to your business.