Who would want to see a copy of my LLC Operating Agreement?
The LLC Operating Agreement is the central 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.
In the course of operating a business, a LLC owner will typically be required to show a copy of the entity’s Operating Agreement in the following instances:
Opening a Bank Account
Some financial institutions will want to view a copy of your entity’s LLC Operating Agreement, along with the Articles of Organization before opening a new business bank account for your entity.
A Lender Institution
Almost all lending institutions will require a LLC borrower to have an Operating Agreement as part of the loan or financing process. Thus, if you plan on borrowing money for your LLC’s business, it is crucial that you have a LLC Operating Agreement.
Potential Investors
If at any time you are interested in speaking to investors about investing in your business, it is extremely important that you have a LLC Operating Agreement. If the business is already operational, most new investors will likely want to see the LLC Operating Agreement to better understand what the current business deal is between the members of the LLC. If, however, you are seeking investors for a new business, it is very important that you have a LLC Operating Agreement to show new investors what the terms of the investment will be.
Securing a Lease
If you will be leasing office space for your business at some point, it is very important to have a LLC Operating Agreement. Most landlords or leasing agents will want to view a copy of the entity’s LLC Operating Agreement as part of the lease/rental process.
Selling your Business
If you would like to sell your business at some point in the future, it is very important that you have a LLC Operating Agreement. Generally, a buyer wanting to purchase an interest in your business will want to view your LLC Operating Agreement.
Your Accountant
It is common for an accountant who will be preparing your LLC’s tax return to request a copy of the entity’s Operating Agreement. An accountant will typically want to review the entity’s LLC Operating Agreement for various tax return and tax planning purposes.
Your Attorney
Generally anytime the LLC will be entering into a transaction, such as a purchase, sale, lease, loan, etc, your attorney will likely want to review the LLC’s Operating Agreement as part of the due diligence process.
Self Directed IRA
Most custodian trustees will request to view a copy of your Self Directed IRA LLC Operating Agreement as part of transferring funds to your new Self Directed IRA custodian.
Government Contracts or Licenses
If you will be applying for a government contract or license, most federal and state agencies will require the applicants to provide a copy of the entity’s LLC Operating Agreement as part of the application process.
The IRS
In the course of a tax audit, the Internal Revenue Service may request a copy of your entity’s LLC Operating Agreement. It is crucial for every LLC to have an Operating Agreement. Without a LLC Operating Agreement, the operations of the LLC’s business will be restricted and its ultimate success may be placed at risk.
