Is it necessary to have an Operating Agreement?

It is possible to have a written operating agreement in most states, but you are not advised to begin a business without one. The following are a few reasons why an operating agreement is necessary:

• By showing that you have been meticulous about organizing your LLC, it aids in guaranteeing that courts will be respectful of your personal liability protection.
• Rules that regulate how profits will be separated, the process for making major business decisions, and the measures for handling the departure and addition of members are established.
• It aids in avoiding misunderstandings between the owners and management over finances.
• It prevents your LLC from being regulated by the default rules in the LLC laws of your state, which may not be to your advantage.