LLC Operating Agreement NC: Everything You Need to Know
An LLC operating agreement NC is a written agreement created by the members of a limited liability company (LLC) in the state of North Carolina to outline how the business will run.3 min read
North Carolina LLC Operating Agreement
Operating agreements are written with the purpose to guide the members of an LLC in managing their business and handling the following:
- Business policies
- Member duties and responsibilities
- Member relations
If a company doesn't form an operating agreement, the owners or members of that business will have no guidelines or requirements set forth for handling major issues or changes that come about.
LLCs in North Carolina, and most other states, are not required to have an operating agreement to be allowed to operate in the state, but they are a good idea to have anyway. Operating agreements not only help to avoid disputes among members, but they also help maintain the level of liability protection promised by the LLC structure. If the company gets in to any legal trouble, an operating agreement can spell out how such an event should be handled.
Operating agreements also help to keep the responsibilities of the company separate from the responsibilities of the members, especially when it comes to financial obligations.
Once an agreement is formed, any members who later become part of the company by buying interest will also be bound to the stipulations in the operating agreement.
If members want to change or add to any terms in the agreement, they may do so at any time as long as all members are in agreement and their changes are in writing.
The state of North Carolina does not require LLCs to mail a copy of their operating agreement like they do the formation documents. Operating agreements are documents that are kept internally, so the company will want to keep the agreement with its other records and important documents.
Operating agreements should include the following information:
- Names of all members and the amount of interest they hold in the company (or the percent of the business that they own)
- Management structure and practices of the LLC
- Taxation information and procedures
- Profit and loss distribution practices
If a business does not want to form their own operating agreement, the state will provide a generic agreement that they can sign and keep for future reference. These basic agreements will work for most business types, but members lose the opportunity to have complete control of how the business is handled.
Some businesses who partake in more complicated business practices may require additional agreements or specific types of management for their particular industry. These companies will benefit from getting legal assistance when drafting their operating agreement.
The LLC business structure allows for flexibility when choosing how owners would like their company to be managed.
Operating agreements can reflect this flexibility because they are able to change with the business as it adds members or changes structure.
Basic changes can be made by simply opening the original document and making changes. Such changes include:
- Change of address for a member
- Change of registered agent or office
Bigger changes should be handled by all of the members. If member interest is sold or there are changes in financing, a new agreement will likely need to be drafted and signed by all members. These changes are best handled with the help of a business attorney.
If a new operating agreement is drafted and signed, the old versions should all be kept together with the new agreement.
Operating agreements need to include much of the information found in a company's North Carolina formation documents. This information includes:
- LLC formation date
- Name of registered agent
- Office address of registered agent
- Purpose of the LLC
- Member names, addresses, and ownership percentages
Free North Carolina LLC Operating Agreement Template
If an LLC in North Carolina wants to form an operating agreement but doesn't know exactly how it should look, the state provides a template, free of charge and online. This template will work for most business types.
The business owners will need to go over the agreement together, best with the assistance of a business lawyer, and include all of the information requested on the form. Once the form is filled out, every member should sign it as a symbol of their agreement to its stipulations and accuracy of information.
If you need help with LLC S Corp taxation, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.