Why is an LLC operating agreement so important for a San Diego startup or existing business? Why do so many LLCs fail to effectively utilize this crucial corporate document? The LLC operating agreement establishes not only the responsibility of an LLC’s owners or “members,” it protects the ownership as the business grows. The operating agreement specifies voting rights, percentage of ownership interest as well as the distribution of profits or losses. It should also provide for the additional of new members when future investment is required, while protecting the business from major life events of existing members such as divorce, incapacity or unexpected loss of life.
The LLC operating agreement is an important component of the corporate veil which separates the individual interests of it’s owners from the liabilities and debts of the business itself. This is the primary reason for selecting an LLC or any business entity at the outset of operations.
California has some of the most complex laws governing corporate entities and how business is conducted within our state. Downloaded forms do not provide guidance or the addition of specific clauses or sections of the LLC operating agreement. This often leads to disputes between the members of an LLC resulting in needless expense and distraction from the primary focus of running the business itself.
The Watkins Firm provides a cost-effective solution for LLC startup businesses and existing companies. We carefully guide our clients through the hundreds of optional clauses and sections of the agreement to ensure it provides the protections members require. California law provides additional advantages to minority interests which must be specifically addressed in the operating agreement.
Why is an LLC operating agreement so important for any San Diego area LLC? It provides essential protections for the company, it’s owner members and the ongoing operational viability of the business itself. We invite you to review the recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a free consultation.