If you are about to form a limited liability company (LLC) in North Carolina, you may already know the advantages this structure offers you. Owners, called members, are protected from liabilities the company incurs and are not double taxed, since an LLC usually uses a pass-through tax structure.
To form an LLC, you must file Articles of Organization with the Secretary of State. North Carolina recognizes the spirit of the members’ wishes if an operating agreement is oral or even implied, meaning that a written contract is not required. However, it is highly recommended that you work with a North Carolina operating agreements lawyer to define how your business will operate. A skilled attorney at Sparks Law could help you avoid significant problems in the future by putting your business agreement into writing.
An LLC operating agreement spells out how members will handle all the critical decisions in running a successful business. If these rules are not memorialized in a written document, misunderstandings may cause serious problems in the future.
An operating agreement should address many issues, including:
The operating agreement should also include tax preferences, whether as a pass-through entity or a corporate structure, as well as guidelines for when a member is in breach and facing expulsion or termination. A skilled lawyer could help North Carolina business owners draft an operating agreement that includes these necessary details.
It is common when forming a business to believe a written operating agreement can always come later. However, if misunderstandings arise in the future without an agreement in place, the courts can dissolve the LLC, or members may end up in court for protracted litigation. A local operating agreements lawyer could protect members from these problems by drafting a contract now.
If members wish to revise an operating agreement, they can specify which form the amendment should take. For example, if an agreement is oral but can only be amended in writing, nobody can claim that the agreement was amended if it is not put into writing.
When one person owns a business, they may choose an LLC structure rather than a sole proprietorship. A sole member may benefit from this structure if they wish to customize duties and provisions. For a single owner, an operating agreement can account for how new members may be admitted should the business require a capital infusion for expansion. One of our experienced lawyers at Sparks Law can customize a simple operating agreement for a sole owner to allow for future growth.
Under the North Carolina Limited Liability Company Act § 57D-3-03, the state establishes certain actions that require the approval of every member. For instance, all members must adopt or amend the agreement, and they are all permitted to examine the company’s records when requested. All members should agree to make any substantial asset transfer, admit new members, dissolve the company, or merge with another company. A knowledgeable local attorney who handles operating agreements could further explain the laws pertaining to LLCs in the state.
If you have chosen to structure your new business as a limited liability company, you are joining millions of other entrepreneurs who have made it the most popular entity in America. You will enjoy benefits of both corporate and partnership structures, as well as more relaxed reporting duties.
After filing your Articles of Organization with the Secretary of State, you should contact a North Carolina operating agreements lawyer at Sparks Law. By memorializing how you will run your business, you can avoid future misunderstandings and more significant problems. Schedule your initial consultation and give us a call today.