Operating Agreements: Just Like a Prenup for Your Business

Some legal documents are too important to ignore. One of those is an Operating Agreement. This is especially important for a Limited Liability Corporation (LLC) with more than one owner. Basically, this document will be like a prenuptial agreement.

Why? Creating a business with a partner or partners is just like marriage: You may enter this relationship hoping for the best but a written OA will be preparing you for the worst, aiming to protect the parties.

What is an Operational Agreement?

An operating agreement is a type of contract. An OA governs the internal operations of the LLC and reflects a consensus between the members of the LLC. It acts as an internal contract. Some agencies and institutions such as banks make them mandatory to establish the existence of the company.

In Arizona, this internal document is not mandatory, but it is highly recommended to have one in place to prevent conflict between the members of the LLC. This, because a good OA defines the finances, organization, and rules for smooth operation. Also offers options for the solution of possible conflict and even the dissolution of the entity.

Operational Agreements and Family-Owned Businesses

We especially recommend OA when the LCC members are family members. This can be a great way to assure that there will be a separation between business-life and family-life.

Who knows! Maybe it can help make the thanksgiving dinners and family gatherings a cordial event.

A business, even a small one, is a valuable asset worth protecting. Businesses of all sizes must consider having these documents in place even when your brother is helping you run the business.

Potentially, an OP can save you so much drama.

About Attorney Marcos E. Garciaacosta

Marcos E. Garciaacosta is a business, trademark, and intellectual property attorney. Schedule a consultation at (480) 324-6378 for an Operating Agreement tailored to your LLC. You also can e-mail us at marcoslaw@legalbizglobal.com

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