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Operating and Shareholder Agreements
Columbus, Ohio

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Formation and Governance


Operating and Shareholder Agreements

What is an operating agreement?
An operating agreement is the formal governing document for an LLC. The operating agreement tells us who owns the LLC, what their percentage of ownership is, what they are required to contribute to the business, how management decisions are made, what happens if a member wants to leave the business, and even what should happen if there is a dispute between the members.

Read more about why it is critical to have a well-drafted operating agreement.

Why does my single-member LLC need an operating agreement?
Even if you are the sole owner of your LLC, you still need an operating agreement:

  • Certain default rules in the state statute governing LLCs may not make sense for your business.
  • The operating agreement serves as a basic guide for keeping the business legally compliant.
  • It may be required by your bank or other third parties to confirm the business’s structure or ownership.
  • Some banks require the operating agreement (and will not accept your personal power of attorney) to decide who gets access to any business bank accounts.
  • Having (and following) the operating agreement can help protect you in the event of a business lawsuit.