Discover what an LLC Operating Agreement is, why it's important, and how it protects your business in this informative guide.
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Discover what an LLC Operating Agreement is, why it's important, and how it protects your business in this informative guide.
Timestamp Sections :
00:00 Intro
00:28 What is LLC?
02:17 The Components
03:39 Tailor Brands
05:06 Plans & Pricing
06:35 My Experience
08:23 Outro
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Understanding LLC Operating Agreements
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Hey friends, welcome back to the channel! Running an LLC is not easy, and there are many things I wish I knew before starting mine. Today, we’re focusing on one crucial aspect: the LLC operating agreement and the easiest way I've found to start and manage my LLC. An LLC operating agreement is the blueprint for your business, detailing rules and regulations for its operation.
Whether you’re a single-member LLC or have multiple owners, this document sets the tone for how your LLC runs. While not legally required in every state, having one protects you from potential conflicts and legal issues. It clarifies roles, responsibilities, and conflict resolution methods, helping to safeguard your personal assets and ensuring your business is treated distinctly from a sole proprietorship.
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Components of an Operating Agreement
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So, what should an operating agreement include? There are four main components every agreement should have. First, management and voting rules determine who’s in charge and how decisions are made. Second, capital contributions and distributions outline who’s investing what and how profits or losses are divided.
Third, membership and dissolution practices cover how new members join, how existing members leave, and what happens if the business dissolves. Lastly, operational guidelines specify how the company should function day-to-day. Remember, your operating agreement is a living document, meaning it can and should evolve as your business grows and changes. Regular updates ensure it stays relevant and effective.
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Tailor Brands and Pricing Options
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Now, all this can seem overwhelming, but you don’t have to go it alone. Tailor Brands is a fantastic resource that helps with forming and maintaining your LLC, including drafting your operating agreement. They offer ongoing support, covering tax issues, annual compliance, and even branding.
Their services are especially beneficial for beginners. Tailor Brands provides three pricing options: the free Lite Plan, the Essential Plan at around $200 per year, and the Elite Plan at around $250 per year. Each plan offers different levels of support, from self-guided assistance to comprehensive help with legal and branding needs. Personally, I found the Elite Plan invaluable when starting my LLC during a challenging time, offering extensive support and excellent customer service.
Hope you enjoyed my What is an LLC Operating Agreement? Video.