Sample Family Llc Operating Agreement
When starting a family business, it`s essential to have an operating agreement in place. An LLC (Limited Liability Company) operating agreement sets out the legal and financial structure of the company, outlining the responsibilities and rights of each member. It provides clarity in terms of how the business will operate, how profits will be distributed, and how any disputes will be resolved. Here`s a sample family LLC operating agreement to give you an idea of what it should include.
I. Formation and Purpose
This section outlines the details of the LLC`s formation, including its name, address, and purpose. It should also include how long the LLC will be in existence.
II. Members and Capitalization
This section outlines who the members of the LLC are, what their respective ownership percentages are, and how capital contributions will be made. It also specifies the voting rights of each member and how decisions will be made.
This section outlines who will manage the LLC, whether it`s members or a manager appointed by the members. It specifies the duties and responsibilities of the manager, including how they will be compensated.
IV. Profits and Losses
This section outlines how profits and losses will be allocated among the members. It includes how distributions will be made and when they will be made.
V. Transfer of Membership Interests
This section outlines whether members are allowed to transfer their ownership interests and under what circumstances. It also specifies the process for a member to sell their interest in the LLC.
This section outlines how the LLC will be dissolved, including who has the authority to initiate the process and how assets will be distributed.
VII. Dispute Resolution
This section outlines how disputes among members and with third parties will be resolved. It specifies the process for mediation or arbitration and the governing law in the event of litigation.
VIII. Miscellaneous Provisions
This section outlines any additional provisions that are not covered in the preceding sections, such as confidentiality agreements, non-compete clauses, and indemnification provisions.
In conclusion, a family LLC operating agreement is a crucial component of any family business. It outlines the legal and financial structure of the LLC, ensuring that every member is aware of their rights, responsibilities, and obligations. This sample family LLC operating agreement should give you an idea of what to include in your own agreement. Remember, it`s essential to seek legal advice to ensure your operating agreement complies with state and federal laws.