Understanding LLC Operating Agreements: What You Need to Know
Creating an LLC: Signing an Operating Agreement between Partners3 min read
An LLC operating agreement is a legally binding document, between two or more member partners that outlines the rules and responsibilities of a limited liability company (LLC). It is a crucial document in setting up your business structure, so it is important to have a thorough understanding of what the agreement entails as you form your business. Every business owner in the Chicago, IL area should be familiar with LLC operating agreements to ensure compliance with state laws as well as having a safe framework for their business to run smoothly.
Fortunately, UpCounsel is here to help Chicago business owners make sure their LLC is in full compliance with state laws and secure the most successful future. UpCounsel's experienced and highly-rated lawyers are available to provide guidance on drafting and filing your operating agreement.
What Is an LLC Operating Agreement?
An operating agreement establishes the rules of the LLC, including how much each member owns of the company, responsibilities of each member, how profits are allocated, and other details of ownership and operation. The LLC operating agreement is also the document used when the LLC admits new members or when members leave the company.
Every LLC in the United States should have an operating agreement as it is an integral document in both forming and running an LLC. Without it, you are not officially an LLC in the eyes of the law. Since it dictates the management and operations of the LLC, having an agreement is also an invaluable asset should any disputes arise.
When Do I Need a Chicago, IL Operating Agreement?
You need an operating agreement when forming your LLC in Chicago. Not only is it important to have when starting your business, but state law may require you to have an agreement. If your LLC has more than one member, both parties need to agree to the terms outlined in the document.
What Should I Include in an LLC Operating Agreement?
The contents of an operating agreement:
• Member contributions and responsibilities
• Initial members
• Rules and regulations
• Tax treatment
• Management structure
• Voting rights
• Documents and regulations
• Buy/sell provisions
• Right of first refusal
• Profit allocation
Even if you are not required to have an LLC operating agreement, having one is beneficial for both founders and members. By having a written agreement to refer to and abide by, misunderstandings and disputes are less likely to occur.
How Can I Register and File an LLC Operating Agreement?
When you are ready to register your LLC, you will need to file an “Articles of Organization”. Your LLC operating agreement can be attached to the Articles of Organization to complete the registration. Having an LLC attorney in Chicago who is familiar with the laws and requirements governing LLCs in the state can ensure that the documents are filed properly and expedite the filing process.
UpCounsel provides an online platform to connect with business lawyers in the Chicago area who can help you file your LLC operating agreement. We vet each attorney and only work with lawyers who have the necessary experience and successful track record in business law. With UpCounsel, you can be assured of receiving top quality legal services at competitive prices.
Having an LLC operating agreement is a crucial part of starting and running a limited liability company in the Chicago, IL area. The document provides a framework for how tasks and ownership is allocated and serves to protect members from litigation and other legal issues. An experienced attorney in the Chicago area can help you draft, review, and file your operating agreement quickly and easily.
At UpCounsel, you can find highly-rated business lawyers with the expertise to handle all of your LLC legalization needs. All of our attorneys have been hand-picked for their experience in business law and have been pre-vetted to ensure you are getting the highest-quality legal services.