Jun 11

Articles of Organization and Operating Agreement

Author: Ashton Sanders

When starting a business, one of the first steps is to file the necessary paperwork with the state. Among these documents are the articles of organization and operating agreement. While they sound similar, they serve different purposes and are essential for the proper functioning of a business.

Articles of organization are documents that establish a limited liability company (LLC). They outline basic information about the company, such as its name and address, the names of its members, and its purpose. Articles of organization are filed with the state and become public record.

The operating agreement, on the other hand, is a private document that outlines the internal workings of the business. It sets out the rules and regulations that govern the company`s operations, such as the rights and responsibilities of the members, how profits and losses are divided, and how decisions are made. Unlike the articles of organization, the operating agreement is not required by law in all states, but it is highly recommended. It serves as a valuable tool for resolving disputes and ensuring that everyone is on the same page.

When drafting an operating agreement, it is important to consider the unique needs and goals of the business. For example, some LLCs may want to have a managing member who has more authority than the other members, while others may want to ensure that all members have equal say in decision-making. The operating agreement can also address issues such as how new members can be added or how existing members can be removed.

In addition to its practical benefits, having a well-crafted operating agreement can also provide some legal protection for the business and its members. It can help prevent disputes from arising, and it can also help shield members from personal liability in the event of legal action.

When it comes to SEO, articles of organization and operating agreements may not seem like the most exciting topics. However, they are important documents that can have a big impact on the success of a business. By ensuring that these documents are properly filed and updated as needed, businesses can set themselves up for long-term success.


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