Operating Agreement

An operating agreement is a legal contract among the members of a limited liability company (LLC) that outlines the terms and conditions for the management and operation of the company. It typically includes details such as the ownership and capital contributions of each member, the roles and responsibilities of the managers, the procedures for making decisions and resolving disputes, and any restrictions on the transfer of membership interests. The agreement may also cover issues such as the allocation of profits and losses, the distribution of cash flow, and the dissolution of the company. Operating agreements are important for establishing a clear and agreed-upon framework for the internal governance of an LLC, and for protecting the interests of the members. They should be carefully drafted and reviewed by legal counsel to ensure that they are comprehensive, enforceable, and compliant with relevant state laws.