Disclaimer: This blog post focuses on North Carolina law and follows the NC Secretary of State rules. We cannot speak nor advise you on what other states’ rules and policies are for limited liability companies.
*This information is taken from the North Carolina Secretary of State’s website and can be viewed here.
An operating agreement governs the internal rules of a Limited Liability Company (LLC). A company’s operating agreement is not filed with the NC Secretary of State. Usually an operating agreement outlines the financial and functional regulations of a LLC. Once the operating agreement is signed by all the members/managers of the company it is an official contract binding them to the agreements’ terms. Most states, like North Carolina, do not require operating agreements. However, an operating agreement is a beneficial document to have because it structures the company’s finances and organization and provides rules and regulations for the company to run effectively and efficiently.
Examples of why YOU need an operating agreement
- Operating agreements give members protection from personal liability to the LLC.
- You will have business arrangements written down instead of any verbal agreements.
- State default rules govern LLCs without an operating agreement. Because state default rules are often very general, your operating agreement can be much more specific and tailored to your LLC.
What is included in an operating agreement?
- Percentage of members’ ownership;
- Voting rights;
- Duties of managers and members;
- Distribution of profits and losses; and
- Information about company meetings.
Yes, we have a video on that! Check out our video on LLC Formation.
Contact the NC Secretary of State
2 South Salisbury St.
Raleigh, NC 27601