Forming a limited liability company (LLC) or converting your current sole proprietorship or partnership to an LLC can be an attractive option for your business, offering liability protection with less formality than a corporation.
Filing Articles of Organization with the Missouri Secretary of State is just the first step in the LLC formation process. An operating agreement is a document that outlines how your LLC will be run and is an important document to the LLC. Missouri statute requires that all Missouri LLCs have an operating agreement. Additionally, a well-crafted operating agreement can benefit your business and help you avoid significant problems down the road. Once signed by all members, the operating agreement is legally binding.
An operating agreement may help maintain members’ limited liability. An important benefit of LLCs is that its members have limited liability. Members will not be held liable for the obligations of the LLC. However, that limited liability may be lost if steps are not taken to maintain the business as an entity separate from its members. Creating and following an operating agreement is one important step that can be taken to show the LLC is its own separate entity. This is especially important for LLCs with only one owner (single-member LLCs).
An operating agreement allows you to tailor how your business operates. Having an operating agreement in place allows you to customize provisions concerning the management and ownership of your business. For example, how profits and losses are divided among the LLC members, what restrictions are placed on the transfer of ownership interests, and what steps will be followed if the members decide to dissolve the LLC in the future.
An operating agreement is needed to do business. Most banks will require a copy of your LLC’s operating agreement before opening a bank account owned by the LLC. If your LLC wishes to buy or sell real property, an operating agreement will be required for title insurance purposes. Other institutions or individuals with which your LLC does business may require a copy as well, to review how the LLC operates and who has the authority to act on its behalf.
Our attorneys are experienced in drafting LLC operating agreements and can assist you in customizing your operating agreement to meet your LLC’s needs and meet Missouri statute requirements. We would be happy to discuss your LLC with you. Please call our office at (417) 882-2828 to schedule an appointment.
