Do I need an operating agreement for my North Carolina LLC?
It is relatively easy to create a limited liability company in North Carolina. You simply fill out a form from the North Carolina Secretary of State website, and file it with the required fee. A few days to a week later, the Secretary of State’s office will notify you that your LLC is now open. You can then apply for a tax ID number by going to the IRS website, and you are in business.
The question often arises - do I need an operating agreement for my new LLC? The answer depends on what you intend to do with your new business. Think of an operating agreement as the “Monopoly rules” for how the company will operate. Who will control the day to day operations? How will profits be disbursed? How will new members be brought in? How will membership interests be valued for members who decide to leave? These and other decisions are typically addressed in an operating agreement.
If you do not have an operating agreement and there are multiple members of the LLC, there is significant risk of a dispute, typically when one or more members decide to leave. If the parties have not determined ahead of time how the departing member’s interest will be valued and who will pay for it, there is a high chance for a dispute. In some instances, the court must get involved to determine how to proceed. If the parties can plan ahead of time by having an operating agreement, this can be avoided.
If you are the only member of the LLC, it may not be necessary to have an operating agreement unless and until you bring in new members.
If you have questions about your limited liability company, please feel free to contact us.
Questions?
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This article is not intended to give, and should not be relied upon for, legal advice in any particular circumstance or fact situation. No action should be taken in reliance upon the information contained in this article without obtaining the advice of an attorney.
