What is the purpose of an operational agreement?

When you start a business in Georgia, you have many documents you must create. These documents help you to ensure your business meets legal requirements and protects your business. Some documents also help protect you and ensure your rights are maintained. If you start a limited liability company, one of those documents is an operational agreement, which the Small Business Association explains is a written document outlining the function, form and purpose of your business.

In your agreement, you should include the names of each owner, along with their addresses. You also want to outline the percentage of ownership for each owner, along with their rights and responsibilities. Make sure to identify who is in charge of each aspect of the business, including who has the power to make decisions or what process will be used to make decisions.

You also want to plan ahead. Make sure the agreement includes information on how profits and losses are distributed. Create the rules for a buyout or what happens if an owner leaves the business. In addition, make sure that you include any information that is important to the operation of your business.

Your operational agreement offers protects for all the owners. It also gives you some state protection. It works well to clarify agreements and anything that you have discussed about the business, putting it in a legal, written document. You should keep the agreement as part of your business records. This information is for education only. It is not legal advice.

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