An LLC operating agreement Nevada is a Nevada-based legal agreement between members of an LLC that defines the procedures and scope of operations of the company.

Nevada LLC Operating Agreement

An LLC operating agreement establishes business relationships between members of the company. It also establishes LLC members' percentage of ownership and their share in business profits. The agreement defines the rights and responsibilities of the members and contains procedures for transfer of membership.

An LLC's operating agreement is like a corporation's by-laws. It offers clarity and protection to members in case of litigation and must be filed in order for members to receive tax benefits. For single-member LLCs, the operating agreement also declares the structure of the business.

An LLC's operating agreement serves as legal proof that the company is a separate entity from its owners. It thus protects the owner's private assets in case of litigation. You should review the agreement carefully. If anything in it is not clear, consult your attorney.

NRS: Chapter 86 outlines provisions relating to Nevada LLCs. Among other stipulations, Nevada LLCs' operating agreements should include the following:

  • Declaration of LLC Formation
  • Name and address of a registered agent in Nevada for service of process
  • Terms and conditions of Nevada LLC
  • Purpose of forming the Nevada LLC
  • Company's place of business
  • Procedure for admitting new members
  • Assignment of membership interests
  • Procedure for valuation of membership interest
  • Provisions for members' exit from the company
  • Distribution of company interests
  • Details of all the managers of the company
  • Details of all the members of the company

To form an LLC in Nevada, you must file articles of organization with the Secretary of State.

Though you are not legally required to have an LLC operating agreement in Nevada, it's prudent to have one, even if you are running a single-member company. The agreement strengthens your limited liability protection, removes operational misunderstandings, and prevents default rules from applying to your LLC.

The major advantage of having an operating agreement is that it documents the fact that your personal liability is limited. In the absence of a formal agreement, a single-member LLC would be treated like a sole proprietorship, possibly exposing members to liability. Having a written operating agreement gives the LLC added credibility and makes it clear that it is a separate legal entity from its members.

Often, an LLC's creditors try to control the company's management and seize its assets through foreclosure and other similar actions. However, Nevada has the strictest laws in the country to prevent creditors from indulging in such activities. As a result, charging order is the only remedy available to a judgment creditor in Nevada. 

Before these laws were enacted, LLC members of the Paladin Commerce Center defaulted on a business loan, and the creditor obtained 100 percent membership interest in the Nevada LLC. However, a Nevada bankruptcy judge ruled that a creditor can only remain an assignee of the membership rights and cannot have voting or other managerial rights in the company. The only way to obtain full-fledged membership is through the procedure specified in the operating agreement.

All business entities in Nevada must maintain records at their registered office. All registered agents in Nevada must keep records on their corporate clients. These records include operating agreements or bylaws and the LLC's membership list.

How to Form an LLC in Nevada

Forming an LLC in Nevada is easy and affordable. However, you need to meet some specific requirements. For example, you must file the required forms with the Secretary of State, pay the prescribed fees, and meet naming and other formation requirements.

An LLC offers the benefit of limited personal liability, and it can have any number of members. It can also have other LLCs, corporations, and foreign entities as its members. The name of your LLC must include the words “Limited Liability Company” or something similar.

The name of your LLC must be unique and different from the names of other existing business entities registered with the Nevada Secretary of State. To make sure that your name is unique, you can apply for a name availability check. If the proposed name is available, you can submit a name reservation request and reserve the name for 90 days. This request can be submitted online or by mail, along with the filing fee of $25.

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