.An operating agreement is a contract that controls your LLC’s operations as well as member interaction with each other and with the LLC. You may think that an operating agreement is not necessary for your single-member LLC - after all - why make an agreement with yourself?
Is the Operating Agreement a Legal Requirement?
Most states don’t require an LLC to have an operating agreement. Of the states that do, some require the operating agreement be written while others permit oral agreements. No state requires an LLC to file an operating agreement with the Secretary of State; instead, the operating agreement is kept with other business records. No matter what state you’re in, however, it’s always a good idea to create a formal, written operating agreement—even for a single-member LLC. Here’s why:
REASON 1 – Avoid State-Imposed Default Rules
Without an operating agreement in place, your LLC is bound by the default rules of your state. Most state laws governing LLCs allow the default rules to be overwritten in the LLC's operating agreement
A business contract dispute can be an extremely stressful and complicated situation, and the attorneys at Bailey & Peterson, P.C. work hard to make the process easier for you.
The best way to avoid dealing with a contract dispute is to ensure that the contract is properly prepared from the start. It is important that the contract is drafted correctly and that all of the terms of the business agreement are clearly stated.
One of the most important steps to take in preparing a contract is to make sure both parties to the contract are aware of what their responsibilities are, what the consequences will be if either party fails to live up to their end of the bargain, and what the remedies will be if one party needs to pursue a legal claim. Any grey area or uncertainty leaves room for interpretation and argument, which can cause lengthy and expensive litigation. For an expertly drafted contract, it's best to have an attorney create and/or review to make sure you are protected.
Just because you’re starting a small business doesn’t mean that you want your business to stay small. Depending on what you want to market, you may envision your business growing into something much bigger. A “startup” can be any company in the early stages of development, but the main difference between a typical small business and a startup is that the latter is focused on growth.
Generally, a startup is a business venture launched by either 1 person or a small founding team of entrepreneurs who seek to fill a gap or create a new niche in the market with a certain product or service. A startup may be financed by its founders or may try to attract outside funding through friends, venture capitalists, or lenders, and each of those funding options will carry different risks and require different strategies.
When it comes to choosing a business structure for your startup, there is no one right answer. You should consider factors such as financial projections, goals, and risks as well as local, state, and federal laws before deciding which structure suits your needs. You should carefully consider the advantages and disadvantages each business entity can offer your new company. An experienced attorney can help you understand the pros and cons of each as they apply to you.
It has been a tough year for small businesses. Across the country, millions of small businesses have temporarily closed their doors due to the COVID-19 pandemic. Even now, as the pandemic eases and operations begin to pick back up, many small businesses report that they are struggling to fill open positions.
But business owners are resilient and creative. Despite the difficulties of the past year, most businesses expect to survive the pandemic, and interest in starting a new business remains high. Many aspiring business owners are interested in becoming franchise owners. In this uncertain economic climate, starting a franchise offers several benefits over other paths to business ownership. Starting a new nonfranchised business is riskier than franchising, can require more upfront capital, and does not provide the network of training and support often available to franchisees.
Franchising, like any business, requires planning, preparation, and paperwork...
Where do you find a good plumber? Who can recommend a good Italian restaurant? Who is the best divorce attorney in town? Sometimes these answers are found by asking family, friends, and neighbors, but many people find answers to these questions on social media and review sites such as Google, Yelp, Amazon, Facebook, and TripAdvisor. Customer reviews and testimonials are excellent marketing tools for a business because they build trust and goodwill and showcase your brand’s history. However, before you use them to promote your business, you need to be aware of what you can and cannot do.
The Federal Trade Commission (FTC) is...
Confused about the differences between a will and a trust? If so, you are not alone. While it is always wise to contact experts like us, it is also important to understand the basics. Here is a quick and simple reference guide:
What a Revocable Living Trust Can Do – That a Will Cannot
What a Will Can Do – That a Revocable Living Trust Cannot
Unaware executors may be exposed to potential personal liability.
The Internal Revenue Service has issued proposed regulations establishing a $67 fee for the issuance of an estate tax closing letter (also known as an IRS Letter 627).
These letters provide an executor of an estate with evidence that the IRS has accepted a filed Form 706, “United States Estate (and Generation-Skipping Transfer) Tax Return,” and that the agency has closed its examination of the return...
The year 2020 was a continuous lesson in the need to prepare for the unpredictable. From the pandemic to natural disasters, businesses have faced numerous challenges that could force them to close. The most common emergencies that businesses typically face fall into three categories:
The Small Business Administration estimates that 25 percent of businesses fail to reopen after an emergency or disaster. In light of this uncertain period, it is essential to take proactive steps to prepare your business for an emergency. Here are the six main things you should keep in mind as you develop your business’s emergency plan...
Succession planning has always been an integral part of estate and retirement planning. For many business owners, especially those in closely held businesses, preparation for succession or the sale of their business is crucial for the owners’ financial future. In light of the global pandemic, we have a situation that’s changing the face of “normal” succession planning. This is also quite relevant to estate planning. If an individual is contemplating a near-term liquidation of a business interest, that may impact the type of estate planning that may be warranted. If an individual lives in a high tax state, consideration of transferring interests to a non-grantor trust in a no-tax state may also be warranted.
This Time Is Different
Although many business owners have weathered difficult times in the past, and perhaps rebuilt their businesses through several recessions, the current situation feels different. Some business owners experienced very bleak times following 9/11 and were able to recover. They survived the financial meltdown in 2008–2009. Now COVID-19. Business owners face a larger dilemma, which has many contemplating whether it is time to do something different.