Why Do I Need An Operating Agreement For My LLC?

An operating agreement is an agreement among the owners (called “members”) of an LLC, defining their ownership, management and other determinations. It would generally be in writing.

All sizes of companies need an operating agreement.  From the smallest 1-member LLC to a large multi-member LLC, an operating agreement is a critically important document.  While detail and complexity will vary dramatically between a small, simple company and a large company, the core components of an operating agreement are important for any type of business. An LLC operating agreement provides legally-binding details of how a company is operated, who owns it, how decisions are made, how additional owners are added (or removed), how profits are to be shared, how ownership interests can (or cannot) be transferred, and so on. Missouri law requires each LLC to have an operating agreement and while it is possible to maintain a “oral” operating agreement, such are inherently problematic and generally ill-advised. In many instances, a thorough written operating agreement can be simple and straightforward.