An overview of LLC operational agreements

For those looking to create their own companies in Gainesville, there are a number of advantages to forming a limited liability company. It allows those running a business to separate their personal lives from their business practices, ensuring that any liability issues that face related to their companies are not felt at home. However, to protect the primary advantage of running one's own business (maintaining complete control), LLC founders need to consider creating an operational agreement. Many states require that an operational agreement be made when an LLC is established; Georgia does not. Yet those creating LLCs locally should strongly consider creating one, because if they don't, their companies' operations are then governed by state law.

One basic element that every operational agreement must include is the company's identifying information. As LLC founders know, the organization's name must be filed with the Georgia Secretary of State's office and must be distinguishable from those of other LLCs operating in the state. Having the information recorded in an operational agreement can help in the event of a naming dispute. The company's registered business office address should also be included in its identifying information. 

Other elements that belong in an LLC operational agreement include: 

  • Statements of intent and purpose  
  • Tax classification 
  • Procedures for admitting new members 
  • The term of the LLC

An operational agreement should also specify whether an LLC is to be managed by its members or its managers. Furthermore, it should also create process to deal with issues arising from within the LLCs management structure. Section 14-11-304 of Georgia's state code recommends that operational agreements should delineate when members or managers have failed in performing their assigned duties, as well as the consequences and penalties that will accompany such failures.  

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