The LLC Operating Agreement, also known as the LLC Agreement, defines the rules and structure of the LLC and can help resolve issues that arise during business operations. This section of the operating agreement focuses on how members adhere to the LLC, their contributions, their capital accounts (ownership accounts), and how profits and losses are distributed to members. It should include the following: This section describes what happens when a member leaves the LLC, when the business ends automatically, and the process of ending the business. This includes: It`s always best to have your company agreement drafted by a lawyer or, if you want to try to draft your own, have it reviewed by a lawyer before members sign. However, if you want to try to create an LLC operating document yourself, be sure to avoid free templates. Your agreement must take into account the type of business and the state in which you operate. It should also describe members` understanding of what their financial and administrative rights will be. Free templates can often lead to errors. For example, you can omit critical language or terms that describe your business. Or they define members` rights in a way that members don`t want. Some states may also require the use of a specific language that may be missing from the model. These terms may include a description of the process for amending the agreement, how notices must be provided, and the applicable law (which state law applies to the LLC).

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