Bay Area Business Lawyers | Primum Law

Have Airtight Operating Agreements

LLC owners will need an operating agreement as part of the documentation for their business. The agreement will establish the structure of your business and the rules by which it is governed. Not only is this document a legal necessity, but you need a customized agreement for your own business situation in order to protect yourself and your status.

In California, LLCs must have an operating agreement to do business. If you are involved in any litigation, one of the first things that opposing counsel will seek is the operating agreement. Even a single-member LLC needs to have an operating agreement.

The operating agreement will govern your relationship with your business partners. There should be no gray areas. Otherwise, you could end up in uncertain territory if you end up embroiled in a dispute with your co-owners. If you are an LLC member, the operating agreement will give you rights and protect you from things like wrongful expulsion. Any verbal agreements may not be honored if there is a dispute.

Without an operating agreement, you may not be able to get protection from lawsuits that you would otherwise have with an LLC. Your business arrangement may look more like a partnership unless you have a clear operating agreement. Partners can have unlimited personal liability, even for the actions of other partners.

An experienced attorney could help you draft a clear and definite operating agreement. You should never take a risk and use an off-the-rack agreement that you review and sign yourself. There is too much risk.

Contact a San Francisco Business Law Attorney Today

The Primum Law Group works with Bay Area and California businesses to both plan and conduct business. You can message us online or call us at 415.293.8042 to schedule an appointment.


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