When conducting business as a limited liability company (LLC), having a sound operating agreement could provide many benefits to its owners or members. This type of contract separates the business from its members, safeguarding its assets from its members’ personal financial affairs and vice versa. If you have recently formed an LLC, you should speak with a Georgia operating agreement lawyer about executing a binding contract.
An experienced business formation attorney can explain the laws that govern limited liability companies and advise you on the advantages of devising an operating agreement. Get in touch with our team to start drafting a contract to protect you from legal liability.
An operating agreement is a legal contract used to distinguish an LLC as a separate entity from its members. Limited liability companies can use these contracts to define the rights, duties, and obligations members have to the business and determine the company’s property interests. A typical operating agreement includes terms concerning matters such as:
When drafted correctly, operating agreements will provide transparency to members of the LLC, reducing the possibility of disputes, and allowing the business to run smoothly. A knowledgeable operating agreements attorney could help LLC members devise contracts tailored to their specific needs.
The difference between an LLC’s operating agreement and its articles of organization can sometimes be a source of confusion for business owners. In Georgia, there are key differences between the two documents. According to the Official Georgia Code Annotated § 14-11-101, operating agreements are optional written or oral contracts between members that outline how the organization conducts business.
Articles of organization, however, are written documents that must be submitted to Georgia’s Secretary of State to legally establish a limited liability company. A lawyer in the area can advise owners on the laws governing LLCs, including the differences between operating agreements and articles of organization.
Forming an LLC typically protects members from being personally liable for any debts or judgments entered against the business. However, creditors or other individuals may still try to hold members personally responsible for the company’s actions or liabilities by “piercing the corporate veil.” Attempts to pierce the corporate veil involve proving that there is no functional difference between the company and its members, and that they merely formed an LLC as a ruse to evade liability for their personal actions.
If creditors or other plaintiffs succeed in piercing the corporate veil, courts may set aside the members’ limited liability and hold them personally responsible for the LLC’s debts or wrongdoing. In court, operating agreements could be offered as evidence to prove that the company is a legitimate entity separate from its members. An operating agreements lawyer can assist LLC members in defending against efforts pierce the corporate veil by drafting a contract on their behalf.
If you own an LLC, executing an operating agreement will help outline you or your partners’ responsibilities to the business and protect you from legal liability. A Georgia operating agreement lawyer can help protect your interests by drafting or negotiating an agreement on your behalf. Call us today to speak with a dedicated attorney about your company.