It is important to consider the rights and obligations of all parties when starting a business. Especially when you make the choice to form your business as a Limited Liability Company, or LLC, it is important to form and implement an operating agreement.
An operating agreement outlines the ways that the members of the LLC must act. Additionally, they outline the rights of each party to collect profits, the procedures for adding new members, and what is to be done if the LLC ends.
A Bloomington operating agreements lawyer could help you craft these essential documents. A knowledgeable business attorney can meet with each member of the LLC to identify their contributions to the company, negotiate the rights of every member, and memorialize these decisions in a comprehensive contract.
Why an LLC Needs an Operating Agreement
One of the main benefits of forming a company as an LLC is that it can shield the owners from any debts or liabilities the company may acquire. This protection makes an LLC an attractive option to many owners, but especially those who are silent members whose only contribution is funding.
Therefore, it is essential for all members to have a clear understanding of their roles in the LLC. Especially for principal members, these operating agreements are especially important. The members who outlay the most capital to start the business likely will want to keep a higher degree of control. On the other hand, minor investors or silent investors will want to keep clear of the entanglements that can arise in running a business. A Bloomington operating agreements lawyer could help explain the role that an operating agreement can have in every aspect of an LLC’s operations.
Legal Requirements for Bloomington Agreements
Unlike many other forms of documentation that business owners must file to start a company, there is no legal requirement for LLC’s to file operating agreements with the Secretary of State. In fact, there is not even a requirement that LLC’s have an operating agreement.
However, this does not mean the members of an LLC can put any terms they wish into an operating agreement. State law strictly limits the terms of operating agreements and outlaws some clauses. For example, MN Statute §322C.0110 says that operating agreements may not:
- Change the company’s capacity to sue other parties
- Eliminate the duty of loyalty or care that all members have to each other
- Eliminate the contractual obligation of good faith
- Change the power of a court to order a dissolution of the LLC
In other words, an operating agreement may not alter the fundamental legal relationship between members that are inherent to LLCs. A Bloomington operating agreements lawyer could help craft an operating agreement that follows the letter of the law and provides protection in case of a future disagreement between members.
A Bloomington Operating Agreements Attorney Could Help
While never required under the law, an operating agreement is central to responsible LLC operation. A Bloomington operating agreements lawyer could help to identify your goals, draft an operating agreement that meets those goals, and ensure any document does not violate state laws. Call today to get started.