Master the Art of Crafting S Corporation Operating Agreements with Legal GPS
Until recent years, S corporations were the go-to choice for small and growing businesses seeking tax advantages and liability protection. While...
3 min read
LegalGPS : Aug. 21, 2024
Discover the key differences between operating agreements vs. articles of incorporation to ensure your business is structured correctly and legally protected.
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An operating agreement is a legal document that outlines the internal workings and structure of a limited liability company (LLC). It defines the rights, responsibilities, and obligations of the LLC's members and managers. The operating agreement typically includes information about how the LLC will be managed, how profits and losses will be distributed, and how major decisions will be made.
The operating agreement is not required by law in all states, but it is highly recommended for LLCs. It provides clarity and protection for the LLC and its members, and it can help prevent disputes and misunderstandings.
Articles of incorporation, also known as a certificate of incorporation or corporate charter, are legal documents that establish a corporation as a separate legal entity. They are filed with the state government and contain important information about the corporation, such as its name, purpose, registered agent, and the number and type of shares of stock it is authorized to issue.
The articles of incorporation serve as the foundation for the corporation's structure and operations. They define the rights and responsibilities of the shareholders, directors, and officers, and they outline the procedures for making important decisions and conducting business.
Attorney-Drafted LLC Operating Agreement
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Both operating agreements and articles of incorporation are essential legal documents that provide clarity and protection for businesses.
Operating agreements are important for LLCs as they help define the rights and responsibilities of the members and managers, outline the decision-making process, and establish rules for profit distribution and management. Without an operating agreement, an LLC may be subject to default rules set by the state, which may not align with the members' intentions.
Articles of incorporation are crucial for corporations as they establish the legal existence of the corporation, define the structure and powers of the corporation, and protect the shareholders' limited liability. Without articles of incorporation, a corporation may not have the legal protections and benefits that come with being a separate legal entity.
Overall, both operating agreements and articles of incorporation provide important legal frameworks that help ensure the smooth operation and protection of businesses.
Attorney-Drafted LLC Operating Agreement
Get a customizable, attorney-drafted LLC Operating Agreement built for legal protection.
Trusted by 1,000+ businesses to safeguard their LLCs.
The biggest question now is, "Do I need a lawyer for an Operating Agreement?” For most businesses and in most cases, you don't need a lawyer to start your business. Instead, many business owners rely on Legal GPS Pro to help with legal issues.
Legal GPS Pro is your All-In-One Legal Toolkit for Businesses. Developed by top startup attorneys, Pro gives you access to 100+ expertly crafted templates including operating agreements, NDAs, and service agreements, and an interactive platform. All designed to protect your company and set it up for lasting success.
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