Operating Agreement (LLCs) or Bylaws (Corporations)
An internal document that is not required to be filed
This legal document is a set of rules governing internal behavior of a company. An Operating Agreement for an LLC defines the rights and responsibilities of the members, how profits and losses are shared, how decisions are made, and other important operational details. In a corporation, the bylaws outline the powers and duties of the board of directors, officers, and shareholders, as well as procedures for meetings, voting, and other corporate actions.
Why is it required?
Although not all States legally require Operating Agreements, these documents provide a necessary framework for the operations of a business, protect the interests of business owners, and help resolve disputes. Operating Agreements are also used to prove that people in charge have the authority they claim to have.
Corporate Bylaws, on the other hand, are required. They provide a formal structure for the corporation (such as defining the roles and responsibilities of directors, officers and shareholders), clarifies decision-making, protects the integrity of a corporate structure (which we often associate with a corporate veil), and helps avoid internal legal disputes.
How much does it cost to file?
There are no filing requirements for Operating Agreements or Bylaws; however, as these are legal documents, depending on complexity, you may incur legal costs for their creation. Standard templates are widely available, and very affordable on-line legal services may also be employed.
Who should use our services?
We offer our existing clients basic consultations on the terms and strategic use of Operating Agreements and Bylaws. There are many strategic circumstances which may require considerable deliberation, such as tax related terms, uneven distribution of income between partners, the number of decision makers, business segregation, and many others. Serial entrepreneurs with multiple businesses and partners have extra challenges navigating the business world, and we help formulate and document these necessary decisions.
Our assistance with this process does not replace the need for legal advice, as defining terms and structuring the desired language may be complicated and could be State specific. We urge legal counsel for every business owner working on their operating documents.
