Every business in New York needs a strong operating agreement that can withstand the touting test of time as laws and regulations change. An operating agreement is a binding contract between partners who come together to form a business entity. This contract outlines the ownership structure, division of profits and losses, and other essential business operations. Compiling a comprehensive operating agreement is an intricate legal process that requires legal expertise and an understanding of local regulations. For businesses executives looking for legal help from business lawyers in the United States, especially those located in New York, this article provides some insight into the steps required to get started on your operating agreement.

Your operating agreement serves as the foundation of your business and strategically positions your business for success. It lays out the expectations of the partners and how to handle different circumstances. It also serves as an important legal document in the event of a dispute and determines the rules the partners must abide by. Starting your operating agreement requires thoughtful consideration of the needs and interests of each partner, the goals of the business, and an understanding of the ever-changing nature of laws and regulations.

Define Your Business

The first step in creating an operating agreement is to define the structure of your business. The most common business structure is an LLC, or limited liability company. An LLC is a business structure that combines characteristics of both corporation and partnership structures and allows the owners to avoid double taxation. The owners of an LLC are called LLC members or partners. There are also other entities such as a sole proprietorship or corporation. Determining the best structure for your business requires careful consideration of the context in which you operate and the preferences of each partner.

Set Up Your Documents

After you have determined the structure of your business, the next step is to create the official documents including the operating agreement and other applicable documents. Typically, an operating agreement in New York is two documents: the initial agreement and the operating agreement. The initial agreement sets out the preliminary terms of the business while the operating agreement outlines the details of the partnership, including issues such as profit sharing, authority to act, and distribution of assets upon dissolution. Depending on the nature of the business, you may need to register with the state, obtain business licenses and permits, or draft other applicable documents.

Address All Situations

Before making the operating agreement official, it is important to make sure it addresses all possible scenarios related to the business. This involves preparing provisions that outline how the business will handle issues such as investor rights, dividend rights, and liquidation plans. It is also important to determine what rights each partner has, how the partners can remove or add members, and how to handle the death or withdrawal of a partner. Additionally, the operating agreement should include a dispute resolution policy that outlines how disputes will be resolved.

Review and Finalize

Once all the clauses have been included in the operating agreement, the final step is to review the document to ensure there are no errors or omissions. The document should also be reviewed by a qualified attorney to make sure it complies with the laws and regulations in New York. This step ensures that the operating agreement is comprehensive and legally binding.

Key point

Creating an operating agreement for your business is a complex process that requires legal expertise and an understanding of local regulations. When crafting your agreement, focus on defining your business, setting up documents, addressing all potential scenarios, and reviewing your agreement with an experienced attorney. By taking the necessary steps, you can ensure a successful operating agreement that sets the groundwork for a successful business.


Operating Agreement,


New York