Parts of the Operating Agreement

• Operating agreements outline all of the operational and management affairs of an LLC. In the operating agreement issues such as compensation, ownership percentages, banking and taxation are all addressed. Each operating agreement also outlines the process for the parties to the agreement to make changes to the agreement.
  
  

Votes Required

• If an operating agreement is in place in a single-member LLC, then the sole owner of the company may change the agreement. If the LLC has more than one member, then the operating agreement will outline what percentage of the owners is required to change the agreement going forward.
  
  

Reasons to Amend the Agreement

• There are dozens of reasons to amend an operating agreement: maybe an owner is exiting the business, or perhaps one is adding or removing some responsibility. Regardless of how big or small the change is an operating agreement should always be kept up to date.
  
  

Drafting the Agreement

• A qualified attorney should always be consulted when drafting or editing an operating agreement. The agreements are legally enforceable and default LLC laws vary from state to state. The only way to make changes to default state rules is via an operating agreement.
  
  

Importance

• Having an up-to-date LLC operating agreement in place is critically important. Operating agreements enforce the limited liability status of the owners, outline financial issues, and determine operational processes. Any time a change happens in your LLC business, be sure that your operating agreement reflects the change.