LLC Operating Agreement Template – Is Bigger Better?

An LLC operating agreement template lets you write your own LLC operating agreement. The operating agreement is a fundamental part of your company’s legal protection, yet many small businesses don’t have one. If they do have one, it is often only a 5-page token effort. What difference does that make? Articles of organization are not meant to just hang in the file cabinet. They need to be maintained and followed in the operation of the company to ensure that they work to protect both your company and personal assets from a lawsuit on either side. It is because of this that bigger really is better. A longer document can cover more exigencies (possibilities) and therefore offer more protection.

What the LLC Operating Agreement Template Does

Which LLC operating agreement template you decide to use is important. The operating agreement defines the document that governs the operation of your company. It controls everything that happens in your LLC by defining actions for future possible events. What happens when your company is sued? How will it be taxed? How will you interact with your partners? How will your company be run? What happens to the LLC after you die? The operating agreement should address all of these issues as well as define what people have to do to get the company assets if you need to declare bankruptcy, and how those company assets are protected. It is where the judge will look in the event of a lawsuit. If issues are not covered, or if your business does not follow the rules set forth in the document, any protection it may have potentially offered will be set aside in what is known as “piercing the corporate veil” by treating your personal and company assets as one and the same.

LLC Operating Agreement Template 

LLC operating agreement templates are available through a variety of channels. You can find a one-size-fits all form in a form book. An attorney, usually expensive, can provide one. A number of internet sites offer an operating agreement as a paid add-on to their articles of organization kits. Many of these are 3-5 page forms that may not address the issues you need to cover. Some small business owners don’t bother to create any articles of organization, figuring they will save some money. Others use an inadequate form. This is a costly mistake.

The truth is that every LLC needs an operating agreement and using a bigger template is better. Your agreement can not be better than the template you use. Certain clauses must be included to give your LLC the best asset protection and tax choices for your business. A short form is too brief to include these clauses. It will not be long enough to provide a LLCs formalities checklist, which acts as a checklist for the courts and lawsuit insurance.

For an LLC operating agreement, look for a template somewhere between 20 and 30 pages long and filled with choices to make sure your company is set up in the best way for your particular business. One small size does not fit all.

When you operate your LLC with full protection, not only will your company assets be protected, so will your personal assets. Many shorter forms do not cover all exigencies and therefore not give the protection you seek in setting up an LLC in the first place.