Outline Everyone's Powers And Responsibilities
If you have formed a limited liability company, otherwise known as an LLC, you must have an operating agreement. This document can help protect you from personal liability and save you lots of stress down the road if anything goes awry with internal affairs down the road. When crafting an operating agreement, my tip is to really spend some time outlining everyone’s powers and responsibilities. The less you leave to the imagination, the better.
— Blake Murphey, American Pipeline Solutions
Because Lawyers Say So
Whenever an attorney or CPA gets on my case for something, I listen and do it. I respect their expertise and experiences. If they’ve seen business owners like me get burnt for things like not having an operating agreement in place or posting labor law posters, I make sure that our posters are displayed, and an agreement is in place. Even if you are the sole owner of a business, avoid future lawyer freak out moments by getting an operating agreement in place.
— Brett Farmiloe, Markitors
Plan For An Unexpected Exit
You and your business partner are most likely in the honeymoon phase and don’t think it is a good use of your limited funds to invest in legal counsel to document how one or both of you can make your exit. However, you would be wrong. It is much easier to set up a win-win exit strategy in advance than after emotions are high and people feel burned by their former best friend and business partner. Until business partners fully understand the importance and have the tools to negotiate expectations, business divorces will continue to occur at high rates. Worse, the business’s value diminishes significantly because of the distractions caused by these unproductive transitions and transactions.
— Katharine Halpin, The Halpin Companies Inc.
Hire A Professional
An operating agreement defines what duties members are responsible for as it pertains to the business and is also a blueprint of what happens to the company in the event of divorce, death, and dissolution. I believe it is vital to hire an attorney to prepare an operating agreement when a business gets started. A professional will ask the questions you may not think about, and it is best to hammer out the details with all involved before any issues arise, so decisions are made with a clear head and without emotion.
— Kimberly Bogues, Flourish Business Services, LLC