| The modern limited liability company is touted as a | | | | member owners, how the entity will be managed and |
| great business choice for many situations in the | | | | other administrative matters. |
| business world. While most people know what a "LLC" | | | | Many people form LLCs without having a clue |
| is, few grasp the nature of the internal documents that | | | | regarding what to do with the Operating Agreement. |
| control it. The Operating Agreement is one such | | | | Some people file the incorporation forms on their own |
| document. | | | | and aren't even aware they need this document. |
| Why is an LLC a favored business choice? Well, it is | | | | Others use a cheap online service and ignore the blank |
| often touted as offering the best aspects of the other | | | | forms they get from the company. All of this can lead |
| major business entity choices. It offers the shield from | | | | to disaster if the LLC is sued as the lack of an |
| liability that you get with the corporation, but without the | | | | Operating Agreement will more often than not lead to |
| administrative requirements. Even better, it offers the | | | | the termination of the asset protection element of the |
| tax advantages of filing as a partnership with the IRS, | | | | LLC. This means each owner [you] will be personally |
| but still offers asset protection whereas a partnership | | | | liable for the debts of the company! |
| does not. While no business entity is perfect, the LLC | | | | The vast majority of limited liability companies are |
| certainly has some very strong things going for it. | | | | formed for small businesses. The sad truth is most of |
| An LLC is like any other business entity. It is a shell that | | | | these companies can be set aside because the |
| requires certain documentation that will establish how | | | | member owners haven't put together the necessary |
| the company is to function. The Operating Agreement | | | | Operating Agreements to make the company |
| is the major document that does this for the LLC. It | | | | legitimate. Instead, they blindly proceed with business |
| serves the same purpose as the bylaws of a | | | | completely unaware they are sitting on a time bomb. |
| corporation, to wit, it sets out how the rights of the | | | | |