Key Considerations Why Any LLC Needs An Operating Agreement

An operating agreement is a key governing document of a limited liability company (an "LLC"). By its nature, it is an internal, non-public agreement between the members of the company. Ohio law does not require an LLC to have an operating agreement in place; however, having a well drafted operating agreement is highly recommended. While it is widely accepted that big multi-member LLCs need operating agreements, it is often overlooked that smaller companies, including family LLCs and sole member LLCs also need such an agreement in place. Not only is an operating agreement a key document for the members and the company, it's the document routinely requested by bankers, lenders, and potential investors and an important document for company accountants as well. While Ohio law allows a sole member LLC to have an operating agreement, a declaration of a sole member is a document that is frequently used instead (we will be using the "operating agreement" as a collective