An operating agreement acts as the defining document for your LLC. It determines the relationship between the owners and the business, expresses the limits on the personal liability of the owners, and establishes the rights and responsibilities of the owners to each other. It is highly recommended for all LLCs.
An operating agreement may be needed to:
- Open a bank account
- Protect the owners
- Add an additional layer of liability protection for the owners
- Establish the financial boundaries of the owners
- Define how new members can be added
- Define the terms of an owner leaving or selling their interest