The quality of your operating agreement will determine the likelihood and scope of disputes between members in an LLC. When you go to a download form site, or simply copy some form off of the internet and modify it, you leave yourself vulnerable to the primary causes of litigation involving the members who own an LLC: member disputes.
An effective operating agreement should specify the roles of each member, performance measurements, and profit distribution. They should also anticipate the types of normal “life” events such as divorce, personal bankruptcy, or the death or incapacitation of one of the members. Establishing how member’s ownership interests will be valued, and what procedures the company will take to buy-out or add members can prevent disputes later in the company’s life.
The operating agreement should also establish majority and minority interests, voting rights and other influence and decision making procedures associated with how the company will be run, and how profits are to be divided. A little work (and small cost) up front can literally save your company. It can also protect the integrity of all relationships and help the LLC to weather unforseen storms and challenges that might arise.
If you are considering the formation of an LLC, or wish to update or review your corporate documents or operating agreement, we invite you to contact Allen Barron for a complimentary consultation at 866-631-3470. If a conflict has arisen between owners of an LLC, we can work with you to negotiate a fair and prompt resolution and prevent expensive and time consuming litigation.