Why do I Need an Operating Agreement for my LLC?

While many states do not legally require your Limited Liability Company (hereinafter “LLC”) to have an operating agreement, it is not a wise idea to operate an LLC without one, even if you are the sole owner of your company. An operating agreement will help you protect your limited liability status, specify financial and management roles to avoid common misunderstandings, and in order to make sure your business is governed by your own rules, not just the default rules created by your state.

For instance, if an owner/manager contributes more assets than the others, you may want to give that person a greater share of the profits. Or you may want one or more of the owners to receive a salary for their participation and services. Most importantly, you will need to have tailored provisions on how to value an owner’s interest in the business if the owner dies or leaves the company. It will also get you to focus on issues you might not have thought through with your other business partners.

OA

A well-drafted Operating Agreement will provide the following, but not limited to:

  • Provide a framework for the settlement of disputes between members/managers;
  • Prevent a member from selling his/her interest to a third party without first offering it to existing members (rights of first refusal);
  • Provide a framework for the purchase of membership interests by the remaining members in the event a member dies or becomes legally incompetent;
  • Prevent a member from competing against the company both now when he is a member and for a number of years after leaving the company;
  • Require members to maintain the confidentiality of all customer names and other company records;
  • Prevent a member from impairing the goodwill of the company;
  • Prevent a member from soliciting customers away from the company. Provide for the indemnification of the members and officers of the company;

At Gulati Law we ensure that our clients are furnished with a tailored operating agreement drafted to suit the needs of your business and the laws of our state. Contact us today, for yours!

 

Tampa Business Start-Up Weekend

Attorney Gulati will be serving as a business coach for the Tampa Start-Up weekend. If you have a start-up business idea and are interested in pitching it, we highly recommend you attend this event.

Start-up Weekend is a global grassroots movement of active and empowered entrepreneurs who are learning the basics of founding start-ups and launching successful ventures. It is the largest community of passionate entrepreneurs with over 400 past events in 100 countries around the world in 2011.

All Start-up Weekend events follow the same basic model: anyone is welcome to pitch their start-up idea and receive feedback from their peers. Teams organically form around the top ideas (as determined by popular vote) and then it’s a 54 hour frenzy of business model creation, coding, designing, and market validation. The weekends culminate with presentations in front of local entrepreneurial leaders with another opportunity for critical feedback.

Whether entrepreneurs found companies, find a co-founder, meet someone new, or learn a skill far outside their usual 9-to-5, everyone is guaranteed to leave the event better prepared to navigate the chaotic but fun world of start-ups.

For more information visit: http://tampabay.startupweekend.org/

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