When starting a business with a partner, it is important to have a clear understanding of the roles and responsibilities of each member. This is why it is recommended to draft an operating agreement for an LLC (Limited Liability Company).
An operating agreement is a legal document that outlines the rules and regulations of the LLC, including the rights and duties of each member. Here is a sample operating agreement for a 2 member LLC:
1. LLC Name and Purpose
The name of the LLC is [insert name]. The purpose of the LLC is to engage in [insert business purpose].
2. Member Contributions
Each member agrees to contribute [insert dollar amount and/or percentage] to the capital of the LLC. These contributions will be used to fund the operations of the business.
3. Capital Accounts
The LLC will maintain separate capital accounts for each member to track their contributions and distributions.
4. Allocations of Profits and Losses
Profits and losses of the LLC will be allocated to each member in proportion to their ownership percentage.
5. Distributions
Distributions of profits and losses will be made at the end of each fiscal year. Each member may receive a distribution equivalent to their ownership percentage.
6. Management and Voting
Both members will have equal management and voting rights. Decisions will be made through a majority vote, and each member will have one vote.
7. Restrictions on Transfer
No member may transfer their ownership interest without the prior written consent of the other member.
8. Dissolution
The LLC may be dissolved upon agreement of both members or in accordance with state law.
9. Arbitration
Any disputes or disagreements between members will be resolved through arbitration.
10. Governing Law
This operating agreement will be governed by the laws of the state where the LLC is registered.
Conclusion
Having an operating agreement in place for a 2 member LLC is crucial to ensure the smooth functioning of the business. This sample operating agreement provides a framework for members to work together and clearly outlines the rules and regulations for the LLC. It is recommended to consult with a lawyer to ensure that the operating agreement complies with state laws and regulations.