An operating agreement is a contract that sets the obligations, financial rights, and duties for the managers and the rest of the members of an LLC. This is a requirement in some states, but it is not in Wyoming. Is it still a good idea to get one?
It’s up to you. If you are a single member in a LLC it could be needed if you take into account what it says; for multi-member or professionally managed LLCs it is really important.
IWhen you hire us to form your LLC, we provide an operating agreement to you. It can be modified in case you need to add or remove one member.
Because of its intention as a contract to yourself most of the people think this is not necessary just because it could be disregarded or amended when needed. We think that it could be useful in some cases, and we think that the main are: 1- For the transfer of membership interest testament and the “transfer on death” provision. All LLC’s members would like their relatives to inherit the company or a part of it when they die, but not all owners have a plan to transfer their ownership. With this provision you ensure the transition to your relatives. This process could be done by a trust testament or through probate. If you decide for a probate, it will take more money and more time to your heirs and they will not have complete control of the account, so you better ensure your relatives will inherit your LLC with no probating process. 2- It is required in some banks This document is sometimes required by banks to make easier some process in accounting, finance, risk management and some others.
We suggest you to sign one of these and keep a copy for safekeeping, it could be useful in some cases:
• Ownership interest declaring
Even there is not a specific capital contribution required all the members must agree in writing to their contributions or you will be left with no resources if they don’t.
• Defines the scope of management’s powers
These agreement set all the actions a manager has to seek member approval for. Getting loans, buying and selling assets, or even signing contracts are just some examples of this.
• Prevents disclosure of sensitive information
If one member doesn’t sign the agreement limiting disclosure, they could share private information with any other person.
• Restrictions on share transfers
This will avoid your partners from selling their stake without prior permission and eliminate the typical cases in which a third part can vote and have rights in your company.
Operating agreements are really important in LLCs to create a great atmosphere with the members of the company and to ensure a transition to your relatives or loved ones in case you pass away. We recommend you to do it in the first 30 days of your company because this process is rarely completed after this period. If you are interested in this contracts you can contact us and we will help you with this process.