However, an operating agreement generally includes ownership, operations, management and financing details. The information you include in your operating agreement or bylaws depends on your business’s and state’s specific requirements. What should an operating agreement include?
An operating agreement’s general goal is to establish guidelines for how the business owners professionally relate to one another in terms of management and operations.īylaws are similar to operating agreements, except they’re used in corporations (S corporations and C corporations) instead of LLCs, and they often have statutory requirements for the information they include.Īn LLC is a business structure that protects a business owner’s personal assets from business debts or if the business faces a lawsuit or files for bankruptcy. What is an operating agreement?Īn operating agreement outlines and defines internal operating procedures and relationship agreements among the members (owners) of a limited liability company (LLC). There’s a good chance you’ll need some version of both for your business, so it’s important to understand each document’s purpose. Many small business owners get confused about operating agreements and articles of incorporation. Although choosing the best legal structure for your business and filling out forms can seem tedious and daunting, these steps are often legally required parts of the process. Filing the proper paperwork is an essential element of starting a business.
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