Sample Small Business Operating Agreement

A small business operating agreement is a document that outlines the rules and regulations that govern the operations of a limited liability company (LLC). It can help prevent misunderstandings and disputes between members of the LLC, and it can also help protect the company`s liability status.

If you`re starting a small business with two or more people, it`s important to create an operating agreement to ensure everyone is on the same page. A well-crafted operating agreement can also help attract investors and lenders as it demonstrates that the business is structured in a responsible and professional manner.

Here is a sample small business operating agreement to give you an idea of what should be included:

1. Name and Purpose

The first section of the operating agreement should provide the name of the LLC and its purpose. It should also include the state where the company is registered.

2. Members and Ownership

This section should list all of the members of the LLC and their percentage of ownership. It`s important to be clear about how ownership percentages are determined and what happens if a member wants to sell or transfer their ownership stake.

3. Management and Voting

The operating agreement should also outline how the LLC will be managed and how voting will work. This section should also include information on what happens if members can`t agree on a decision.

4. Profits and Losses

The agreement should clearly state how profits and losses will be allocated among members. This section should also include information on how members can receive distributions from the company.

5. Capital Contributions and Financing

This section should outline how much each member is contributing to the company and what happens if additional funds are needed. It should also include information on how the LLC can raise capital through loans, equity offerings, or other means.

6. Transfer of Interests

This section should detail how a member can sell or transfer their ownership interest in the company.

7. Dissolution and Termination

The operating agreement should include information about how the LLC can be dissolved and what happens to its assets if that occurs.

It`s important to note that the specific details of an operating agreement will vary depending on the needs of each individual business. While this sample operating agreement can serve as a starting point, it`s always best to consult with an attorney or other legal professional to ensure that your operating agreement meets your specific needs and complies with state and federal laws.

In summary, a small business operating agreement is a crucial document that outlines the rules and regulations of an LLC. It helps to prevent misunderstandings and disputes and can also protect the company`s liability status. By following this sample operating agreement and working with an attorney or legal professional, you can ensure that your startup is structured for success.

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Author: rob