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OPERATING / 
PARTNERSHIP
AGREEMENT

Have a company with multiple owners? Let us help you nail down your ownership rights.

Why have an Operating Agreement?

An operating agreement is crucial document for any multi-member LLC because it sets out the operational rules and member relationships within the company. These apply to everything from how to vote on important decisions, how to share profits and what happens when a member wants to transfer or sell interests. In other words, it is essential because it establishes the financial and working relationships among business owners and between the members and managers. Every multi-member LLC should have an operating agreement to avoid, and our streamlined process makes it easy and quick. You can start by filling out the form to the right. (Important note: Operating Agreements for single-member LLCs are not as crucial, however, they can be quite helpful for banking and tax purposes and are a sign of good business practices. A simple single-member LLC operating agreement is included in our LLC formation package which you can explore here.)

FAQ'S ON OPERATING/PARTNERSHIP AGREEMENTS:

Should I have an operating agreement for my LLC?

Absolutely, 100% yes! An operating agreement is crucial for any LLC. It outlines the governance and financial relationships between members, reduces conflicts, and enhances credibility with banks and investors. Our form operating agreement has been refined over years of practice, and provides key provisions regarding management of the LLC, voting on important decisions, restrictions on transfers of interests, guidelines on distributions of profit, processes for additional capital calls, plans for potential sale of the company, protection of IP and confidential information, and also estate planning procedures for buyout in cases of death or divorce. A good operating agreement ensures that all future possibilities are accounted for, and the members can focus on the business rather than questions about the future. Further, the process of drafting it often clarifies ownership issues (like governance) that might not have been raised yet. Our process keeps this simple and efficient while still being thorough. Start by filling out the form above.

What are the legal requirements for an operating agreement in Virginia and other states?

Virginia, like most state laws, does not mandate an operating agreement for LLCs. If you do not have one, you will fall back on the state laws for ownership and governance (these often do not fit the specificity of your business). However, usually companies with multiple members that do not have an operating agreement experience significant confusion and conflict when it comes to key ownership rights like management and distributions of profit, so having one is not just beneficial, it's critical.

How can an operating agreement protect my business interests?

An operating agreement provides clarity on member responsibilities, profit distributions, and procedural guidelines, protecting against internal disputes and unfavorable state default rules. While many owners assume they do not need to "spell out such things because they would never fight with their partners over those kinds of issues," in reality, a good operating agreement helps prevent ownership disputes before they happen. By taking your operating agreement seriously, you provide for a much more secure and focused future for your business.

What's in a good operating agreement?

A great operating agreement will at least cover the following:

  • Names and ownership percentages of Members

  • Management provisions

  • Voting on key business decisions

  • Transfer restrictions

  • Tax and profit distribution policies

  • Estate planning provisions

  • Dispute resolution

  • Ownership of IP and confidentiality provisions

  • Sale of the company processes 

  • Liquidation or wind-down processes

  • Amendment procedures

  • Enforcement provisions

  • Access to records provisions

  • Capital contribution and member cap table records 

 

Our process will guide you through these key decisions in a streamlined and efficient fashion. Start with the form above.

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