Creating an operating agreement for your business

On Behalf of | May 20, 2022 | Business Transactions |

At the initial stages of starting a business in Louisiana, an owner will make various decisions that could impact operations going forward. From the contracts used with employees to the entity selection made, choices at the beginning could have a long-term impact. One step a business owner can take that will lay the foundation for long-term success and security is creating a beneficial operating agreement. This is especially important for a limited liability company.

Why do you need one?

An operating agreement is a document that outlines the function and financial designs of a business. This includes rules for how the company will operate and the regulations that management will follow. The purpose of an operating agreement is to clearly establish operations in a way that suits the objectives of the business owners. Once members of an LLC sign the operating agreement, it is a binding contract.

This agreement also protects members of an LLC against personal liability for business debts. An operating agreement can also clarify any verbal agreements, lowering the risk of miscommunications or misunderstandings. Operating agreements can include terms and conditions that are specific for the specific LLC.

A focus on the future

A beneficial and practical operating agreement provides benefits to every member of an LLC. To learn more about what should be in this document and how to create one that provides long-term protection, it will help to discuss the matter with an experienced attorney. This guidance ensures that any agreement made is in the interests of the Louisiana business.