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Why is the Operating Agreement Such an Important Document for an LLC?

Why is the Operating Agreement Such an Important Document for an LLC?  What are the important questions that a new business owner or entrepreneur should be considering before forming a new LLC?  What advantages does an attorney bring to the process of starting a new business in San Diego?  Many new business owners are in a hurry to get the new company formed, and are trying to preserve every dollar in the business checking account to get their business up and running.  We respect that.  However, does it make sense to avoid structuring your business properly up front, investing 6 months to a year or more of your hard work, sweat and money only to wind up in a dispute that costs you the company?  This is what makes the operating agreement such an important document for an LLC.

In the beginning, everyone is excited and working together to get things moving.  Your energy is high and your mind is acutely focused.  There are important questions that are very easy to deal with in the beginning.  However, when they are unanswered and unaddressed, they lead to expensive and time consuming disputes and litigation down the road.  It’s not a question of “if”, it’s a question of “when.”  The operating agreement establishes important central concepts like:

  • How will the voting process work?
  • Who is responsible for what jobs, and how will success be measured for each “member”?
  • How will new investors be brought into the LLC if needed?
  • What happens if one of the co-owners goes through a divorce, or is forced to file personal bankruptcy?  How will their ownership interest in the business be valued and protected?
  • What happens if one of the owners dies?

Your new LLC is worth a phone call.  We invite you to call us for a free and substantive consultation at 866-631-3470.  Your business attorney isn’t just another bill to be paid.  The business professionals and attorneys at Allen Barron have run businesses of all sizes, from small entities to multi-national corporations.  We understand the traps that have forced other new LLCs to close.  We provide the sound counsel needed to succeed in your new start-up and grow.