The most important document for any LLC business is the Operating Agreement. Do not make the mistake of using a sample operating agreement that has improper, incomplete or worse yet, provisions that are not protective to you or your business. Learn about the absolute essentials of what is needed.

BUSINESS ISSUES THAT MUST BE ADDRESSED PROPERLY

By definition, an operating agreement needs to cover the varying matters needed to run a business. This includes ownership, operations, voting, taxes, profits distributions and even cancellation. Given that it must address these, it is impossible to have a very short document. Beware of ones that are too short to sufficiently address the necessary matters.

The operating agreement is also the primary governance document for operating the business. As a result, it serves as a user manual for the stakeholders in a business. Because it serves a practical purpose, the language in the document must be easy to read and understand. Stay away from those sample documents that use too much legalese type language.

BEWARE OF NEGOTIATED SAMPLE AGREEMENTS

Many times existing LLC operating agreements for other businesses are made available a sample ones. The worst mistake you can make is using one of these negotiated documents for your business.

A final agreement for another business has likely been negotiated and customized. If you use one as a starting point, you will not be in the best position to know or understand what the typical provisions are. Even worse, there is a big risk you will be accepting provisions that are hurtful to you and your position and rights in the business.

The lesson here is to never use the final agreements of a different business. When looking for a sample operating agreement, insist on using a model form document as a starting point.

LOOK FOR A DRAFTER THAT IS A LAWYER AND HAS LLC EXPERIENCE

Most of the forms available on the Internet unfortunately are poorly drafted and would never even be considered as a useful document by practicing lawyers.
Unfortunately, it is difficult for a lay person to tell the difference. The best way to guard against this is to insist on only using operating agreement forms that have been drafted by lawyers who use them in the actual practice of business law.

ALWAYS READ THE SAMPLE OPERATING AGREEMENT
Obtaining a proper form is just the beginning. No one form can be sufficient without customization for every business.

Click Here to Learn More about Professional Operating Agreement Forms Drafted by an LLC Attorney