- Why MyLLCAgreement.com?
- Why do I need a LLC Agreement?
- Advantages of using a LLC
- Glossary of LLC Terms
THE LLC OPERATING AGREEMENT – YOUR LLCS MOST IMPORTANT DOCUMENT
The LLC Operating Agreement is the core document that is referred to when issues concerning the LLC need to be resolved. The LLC Operating Agreement is the most important document for your LLC. It is extremely important that you create an Operating Agreement for your LLC entity. By having an LLC Operating Agreement, the members will be provided with a clear set of rules that all members have agreed upon, greatly reducing the likelihood of disagreement between members in the future. Without the formality of an agreement, the basic operation of the LLC would be governed by state law, which may not be advantageous to the LLC, it members, or the business it conducts.
Don’t let the State tell you how to run your Business
Many state LLC statutes, for example, have default rules that govern how certain business decisions should be made, such as how the LLC will be managed, rules for holding meetings and taking votes, rules for the sale of the LLC, how profits and losses should be allocated, amending the Operating Agreement, admitting a new member, and dissolving the LLC. Defaulting to state law for important LLC decisions could jeopardize your business. If you don’t want the state to tell you how to run your business, it’s important that you have a well drafted LLC Operating Agreement. By having an Operating Agreement, you can decide the rules that will govern your LLC's inner workings, rather than having to follow state default rules that may or may not be right for your LLC.
Protect your Limited Liability Status
Even though the LLC Operating Agreement is not required to be filed with any state agency, it is unwise to operate an LLC without an LLC Operating Agreement, even if you're the sole owner of your LLC.
It is extremely important that you create an Operating Agreement to separate yourself as an individual from your LLC, even if you are the sole owner of your LLC. Without the formality of an Operating Agreement, the LLC can closely resemble a sole proprietorship, which does not limit your personal liability for business debts of the LLC. Without an LLC Operating Agreement, the basic operation of the LLC would then be governed by state law, which may not be advantageous to the LLC, it members, or the business it conducts.
The Self Directed IRA LLC Operating Agreement
The LLC Operating Agreement is the most important document for your Self Directed IRA . It is extremely important that you create an Operating Agreement for your Self Directed IRA LLC.
The standard LLC Operating Agreement will not meet the requirements for your Self Directed IRA LLC. In general, a self directed IRA LLC Operating Agreement should include special tax provisions relating to "Investment Retirement Accounts" and "Prohibited Transactions" pursuant to Internal Revenue Code Sections 408 and 4975. In addition, since the LLC will be managed by a manager and not the member, the Operating Agreement would need to include special management provisions.
It is extremely important to have a properly prepared Operating Agreement to fit the needs of your LLC and meet the requirements of the Internal Revenue Service for a Self Directed IRA LLC. In fact, a copy of the LLC Operating Agreement will be required by the Custodian and also by the bank where you will have your LLC's checking account.
When Should I get an Operating Agreement?
You may get an Operating Agreement either before or after forming your LLC. In general, one is not required to have formed an LLC prior to getting an Operating Agreement. In fact, most attorneys tend to advise their clients to discuss the business terms of their venture before forming their entity.
