Operating Agreements

The operating agreement combines facets of the shareholder agreement and the bylaws into a single document that addresses the way the limited liability company handles foundational issues like management, ownership, and distribution of profits.

Nevada Revised Statutes Chapter 86 controls the formation and operation of limited liability companies in Nevada. Limited liability companies, commonly known as LLCs, are creatures of statute and did not exist at common law. LLCs combine the benefits of limited liability enjoyed by corporations with the pass-through taxation benefits of the partnership or sole proprietorship.

The operating agreement is the document that governs the limited liability company, as distinguished from corporations which have shareholder agreements and are typically governed by bylaws. The operating agreement combines facets of the shareholder agreement and the bylaws into a single document that addresses the way the limited liability company handles foundational issues like management, ownership, and distribution of profits. An LLC’s operating agreement typically includes an introduction that contains the identifying information about the LLC, and its purpose, as well as a section describing how the LLC will be managed, the nature of the capital contributions made or required, the allocation of profits and losses, the details of membership transfer, the rules for dissolution and wind up, and any miscellaneous provisions like the requirements for admission of new members, or the amendment to the operating agreement itself. It is important to note that the specific components of an operating agreement may vary depending on the nature of the LLC and the preferences of its members.

An LLC with more than one owner should always hire an attorney to draft its operating agreement because this document governs the relationship between the owners and the owners’ relationship to management. No informed businessperson would invest in an asset or enterprise without knowing these variables. Without clarity on these issues, even the most well-intentioned enterprise is destined for confusion and conflict, which leads to resentment, and ultimately destroys the relationships at the heart of the enterprise. You would not attempt to navigate an unfamiliar continent without a roadmap and a travel plan. Similarly, the operating agreement is a business’s roadmap to success and by following it you empower your business to navigate any challenges and obstacles that may arise to threaten its smooth and efficient operation.

We draft operating agreements on behalf of companies so that they possess the processes, clarity, and organizational structure that will allow them to be successful in the marketplace. Contact us and make an appointment today to discuss the formation of your limited liability company.