LLC Operating Agreement Oregon: Everything You Need to Know
You’ll want to draft an Operating Agreement for your Oregon LLC which is the most common type of business structure formed in the State of Oregon.3 min read
2. How to Write an Oregon Operating Agreement
You’ll want to draft an LLC Operating Agreement Oregon for your Oregon LLC. LLCs are the most common type of business structure formed in the State of Oregon, and a lot of people are more interested in forming LLCs as opposed to corporations for its many benefits. Particularly, there is greater flexibility and fewer formalities for operating an LLC. With that said, an operating agreement is always important and beneficial to have for all LLCs. The agreement is drafted by all members of the LLC and sets forth the management structure of the LLC.
Operating Agreement: An Overview
The operating agreement should be agreed upon by all members, and will specifically identify all decision-making processes regarding the LLC, including how it is managed, how the profits and losses are distributed to the owners, voting rights, the percentages of ownership for all members, and other important items that you deem necessary. Remember that the articles of organization doesn’t govern your LLC. Rather, the operating agreement is the legally binding agreement that governs your LLC, which is why it is so important to ensure that all of the important items are identified in this document.
The operating agreement doesn’t need to be filed with the articles of organization, but it should be kept on file. This agreement might need to be provided to others in certain circumstances, including the sale of property, obtaining lending from a financial institution, or your accountant or lawyer may even request it.
Some key processes to draft in your operating agreement include:
- How the LLC will be managed, i.e., member or manager-managed.
- Who will be the manager of the LLC if it is in fact manager-managed?
- If the LLC will have officers, then you will want to identify all officers.
- Identify what events will require the consent of a majority or all of the members of the LLC.
- Will the company indemnify the members or managers?
- How the company will be taxed, i.e., sole proprietorship, partnership, or corporation.
- How will disputes among members be resolved?
- Will a member be able to freely transfer his or her membership rights?
- Will a member be restricted in the sale of his or her membership rights to only current members of the LLC?
- What will happen if one of the members dies or becomes incapacitated?
There are many other important issues that can be determined in the LLC operating agreement. Therefore, all members should sit down with one another and go over the operating agreement together to prevent any potential issues or legal disputes down the line.
How to Write an Oregon Operating Agreement
You can download a form online, but remember that, in addition to the typical information regarding your business, you will also want to input any other information you deem appropriate. General business information includes the business name and principal address, registered agent name and address, member names and addresses, member ownership percentages and how much capital each member contributed to the Oregon LLC, how the company will be managed (member or manager-managed), etc. If the business will be manager-managed, then you will need to provide the name and address of the manager. A manager can be another business. You’ll also want to include information in the operating agreement regarding any business banking accounts or credit cards, and how the expenses will be paid.
You’ll also want to provide information regarding how and when meetings will be held, and if you plan on keeping minutes of those meetings (required generally for corporations only). As previously noted, there are several significant items to include in the operating agreement. Be sure to also include an arbitration clause, amendment provisions, and dissolution/liquidation processes.
Once you are finished drafting the agreement, you will need to date it and have all members sign the document. The company representative must also sign the document, i.e., responsible party drafting the agreement. After completion, be sure to give all members a copy of the agreement to keep for their own personal records.
If you need help drafting your Oregon LLC operating agreement, 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 with an average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.