The Sauk Prairie Eagle – Ask The Professional Column. (Jared Walker Smith)
Answer: An operating agreement sets forth how the business of the LLC is going to be conducted and the rights and responsibilities of its members. If your LLC does not have an operating agreement, then your LLC is subject to the default rules of Wisconsin’s LLC law—which may not be in your best interests as a member. Having a well-drafted operating agreement lets you customize the structure of your LLC to best fit the goals of your business. In multi-member LLCs, it can help mitigate future conflicts between the members. Even single-member LLCs benefit from having an operating agreement—operating agreements help establish that the LLC is a separate entity from the sole-owner, an important factor in protecting your limited liability. Additionally, an operating agreement can establish what happens to the LLC’s operations if you die or become unable to run the business. If you own an LLC or are thinking of starting one, please see a qualified attorney to make sure that you and your LLC are protected with well-drafted corporate documents, including an operating agreement.
Disclaimer: The above information is provided as general information, not as legal advice, and does not create an attorney client relationship. Before making any decisions regarding legal matters, individuals should consult with a qualified attorney.