Operating agreements are legal documents that involve the members of a limited liability company (LLC). Even when the LLC only has a single member, it is still important to have an operating agreement in place, as it can declare the operating structure the member has chosen for the LLC. When multiple members are part of the LLC, the operating agreement will act as an equivalent to partnership agreements or shareholder agreements. South Carolina has enacted laws surrounding LLCs, and an operating agreement will give members more flexibility with those laws.
An experienced business lawyer from Beth Santilli Law, LLC can help ensure your operating agreement contains everything it should to protect the members of your LLC. Contact us today to request a consultation.
The Uniform South Carolina Limited Liability Company Act
The Uniform South Carolina Limited Liability Company Act governs LLCs in the state. However, it also allows members of an LLC to enter into an operating agreement that will regulate the affairs of the LLC and govern the relations among the members. The LLC Act also allows LLCs to create an operating agreement that overrides or alters some of the rules outlined in the Act.
Topics to Address in an Operating Agreement
Whether you are starting a single member or multi-member LLC, there are certain topics you must address in the operation agreement. These include:
– Organization: The operating agreement should outline when the LLC was formed, who the members are, and the division of ownership.
– Capital contributions: Operating agreements should detail the amount of capital each member has invested into the LLC. The agreement should also detail the approach to be taken to raise additional funds in the future.
– Profit and loss distribution: Most commonly, profits in an LLC are divided evenly among the members. Whether you are dividing the profits in this manner or deviating from that model, the plan should be included in the agreement.
– Changes in membership structure: The agreement should outline how ownership is transferred if a member leaves the LLC.
– Dissolution: There is a chance that the business will be dissolved at some point in the future. Your agreement should outline the process for that.
The Internet has many operating agreement boilerplate templates, but it is not advised that you draft these legal documents on your own. A knowledgeable business lawyer can help ensure your agreement protects your rights and includes all pertinent operating procedures for the business.
Get Legal Help Today
If you are forming an LLC, our experienced operating agreement attorneys can help you start your business the right way. At Beth Santilli Law, LLC, we know how to draft these agreements so roles and responsibilities are clearly defined and the rights of all members can be protected. Contact us today to learn more about how we can help.