Operating Agreements

An operating agreement is a document used by limited liability companies (LLCs) that outline the business' financial and functional decisions including setting rules, regulations and other provisions.  The purpose of the document is to govern the internal operations of the business in a way that addresses the specific needs of the business owners.  Once the document is signed by the members of the LLC, it serves as an official contract binding the LLC members to its terms.  Operating agreements are not mandatory as per the laws in all of the states.  However, it's always recommended to get the operating agreement drafted as soon as you form your LLC.  LLCs operating without an operating agreement are governed by the state's default rules contained in the relevant statute and developed through state court decisions.