What Should I Look for in a Simple Operating Agreement for LLC Template?

Are you finally starting your own business? If so, you probably want to avoid the risks that come with some business structures 🤨. Therefore, a limited liability company is the best for you. That means a simple operating agreement for LLC template is really going to come in handy. 

Compared to other business structures, a limited liability company needs very few formation documents📑📑to start up. Yay! In this article, we are going to focus on an important document in the formation of an LLC. In short, by the time you are done reading this post, you will know everything you need to look out for in a simple operating agreement for LLC template 🤩!

What Is an LLC?

If you have not done much research about business structures in the United States, we are sure you have questions like “What is an LLC 🤨?” A limited liability company popularly called an LLC, is a business structure in which the owners are protected from the business’s liabilities and vice versa.

What does this mean? It means the business owner or owners and their personal assets are protected from the losses and debts of the business. The business and business assets are protected likewise from the personal liability, losses, and debts of the owner or owners.

Also, since most LLCs are known as disregarded entities, taxes are paid as part of the owner or owners’ income taxes. This helps people avoid the dreaded double taxation that comes with some other business structures. Cool, right😊? 

The LLC Operating Agreement

One of the reasons why people prefer LLCs is the limited liability protection they offer. Including the fact that the formation of an LLC is less complex than any other business structure. Aside from the articles of organization, the most important document is your LLC operating agreement. This brings us back to this question: what is an LLC operating agreement?

A limited liability company operating agreement is a legal document that acts as an action plan for your baby business. It details the company’s mode of operation and helps in making any cogent business decision.

This internal document stipulates the role of each member of the company, designates the responsibilities of each office in the company, and outlines other cogent details that guide the day-to-day operation of the business. It is a point of reference which verbal agreements will not give you. Can you see that this document is a must-have for your business😉?

Can I Skip an LLC Operating Agreement?

All LLCs need an operating agreement to ensure conflict-free operations. If it is a single-member LLC, it needs an operating agreement that suits it. Should it be a multi-member LLC, a multi-member LLC operating agreement will do. If you need to know why this is one of the key documents for LLCs, check out this article on the subject. 

First of all, California requires that all LLCs have an operating agreement. Second, without an operating agreement, the limited liability status of your limited liability company is not as clear. Your LLC should not be seen as a corporation, partnership, or sole proprietorship.

In addition to this, an operating agreement, in particular, lets you run your limited liability company in a way that suits you. It distinguishes business property from personal property and lets you control the allocation of profits.

If you don’t prepare and sign this document, your company will be subject to the default rules of the state. And, obviously, you do not want this to happen! Therefore, we are sure you want to complete an LLC operating form and have a say in how your company operates🙂.

What to Look for in a Simple LLC Operating Agreement Template

A lot of people who want to establish their own limited liability company want their business activities to be as simple as possible. This is because they want to have a simple, straightforward operating agreement.

As a result, a lot of business owners have thus made the mistake of obtaining operating agreement templates that usually look simple but are not comprehensive. This section is to prevent you from making such mistakes 🙂.

Below are the basic elements you need to look out for. Ensure that your simple LLC operating agreement template is adequate and comprehensive enough to guide your company operations. This can save you a lot of time later!

The rules for LLCs dictate that these elements should be present in your operating agreement:
  • Company contact information (business name, phone numbers, mail addresses, principal place of business, or registered office address)
  • Registered agent and members’ information
  • Business purpose and statement of intent
  • Business duration (will it run for a period of time?)
  • Initial capital contributions, additional capital contributions, and additional contributions
  • Respective percentage of ownership (often determined by capital contribution)
  • Voting rights (often determined by the respective ownership percentages or percentage of ownership interest)
  • Signatories
  • Management structure/principal office and role designations
  • Distribution of profit and loss
  • Guiding rules and regulations
  • Accurate accounting methods, accounting procedures, and record-keeping (Will you hire the service of an independent accounting firm or tax professional to keep financial records?)
  • Periodic meeting schedules (date and time of weekly, monthly, or annual meetings)
  • Membership changes and succession plan
  • Dissolution (share of profits and distribution of assets in the event of closure or dissolution)

Adding the details above in your LLC agreement template no matter how simple it is will go a long way. This ensures the protection of the limited liability status of the company. Additionally, it keeps up the day-to-day orderly flow of activity. That way, you can focus on the fun parts of being the owner of a professional LLC! 

Obtain a Comprehensive LLC Template

Even if you want your LLC operating agreement to be simple, you have to be sure the simple operating agreement for LLC template you want to use will do. It must be comprehensive enough to cover and protect the important parts of your business.

Ian Corzine and his team of experts dedicate their time to making sure that you leave no important detail out of your operating agreement. Reach out to us today to obtain a simple yet comprehensive operating agreement template at an affordable price😊!

Should you have any questions or need more information about this topic, feel free to go through our other related posts. Don’t hesitate to contact us for consultations, as we are ever ready to help!