At Patrick, Harper & Dixon, LLP, we often work with small business owners who are forming limited liability companies (LLCs) and want to set their operations on solid ground. One of the most important early steps is creating an operating agreement. This written document outlines how the LLC will be run, from daily operations to profit sharing and dispute resolution.
Having an operating agreement can prevent confusion among the LLC’s members and protect your interests. It serves as your company’s playbook—defining responsibilities, clarifying decision-making, and helping you avoid unnecessary conflicts down the road.
Why You Should Have an Operating Agreement, Even in a Single-Member LLC
You don’t need multiple owners for an operating agreement to be useful. Even if you’re running a single-member LLC, the agreement still plays an important role. It helps keep your business and personal affairs separate, which can protect your personal assets if your business is ever involved in a legal dispute.
Banks and lenders may ask for a copy when you open a business account or apply for financing. It also gives your business more credibility with investors, vendors, and clients.
Most importantly, it provides clear instructions if something unexpected happens, like illness, incapacity, or a transfer of ownership. Having those details in writing can help avoid confusion when you’re least prepared for it.
What Does an Operating Agreement Cover?
A well-written operating agreement is tailored to your specific business. While no two agreements are exactly alike, many include provisions that address:
- Each member’s ownership percentage
- Voting rights and responsibilities
- How profits and losses will be distributed
- Procedures for adding or removing members
- What happens if a member wants to leave or sell their interest
- Dispute resolution methods
- Terms for dissolving the business
These topics don’t just come into play when there’s a problem—they’re part of how you’ll manage your business every day.
Benefits of Having a Business Attorney Draft or Review Your Agreement
Templates found online often promise a one-size-fits-all solution. However, no two LLCs are the same, and relying on generic forms can overlook important issues or create gaps that may lead to disputes later.
When we work with you to create an operating agreement, we take the time to understand how your business works. We’ll help you create clear, practical terms that match your goals and comply with North Carolina law. If you already have an agreement in place, we’re happy to review it and suggest updates to reflect recent changes or new directions in your business.
We also look at how your operating agreement fits with your Articles of Organization and tax election. That way, you avoid conflicts between your documents and reduce the risk of confusion down the line.
Can Operating Agreements Be Enforced?
Yes, operating agreements are enforceable in North Carolina. They are contracts between the members of the LLC, and courts typically treat them as such. If a dispute arises, the court will first look to your agreement to determine how to resolve it.
Without one, you may be subject to the state’s default rules, which might not work in your favor. That’s why having a clear and comprehensive agreement gives you a stronger foundation, especially if you ever end up in court.
When Should You Create or Update an Operating Agreement?
The best time to put an operating agreement in place is right after forming your LLC. If your business has been running without one, it’s never too late to fix that.
You should also revisit your agreement if:
- You bring on a new member
- Someone wants to leave or sell their interest
- Your business expands into a new area
- Your roles or responsibilities change significantly
We can review your existing agreement and help you make updates that reflect where your business is today.
Contact Our Experienced Hickory Business Formation Attorneys
Starting a business is exciting, but it also comes with responsibilities. A well-crafted operating agreement gives you peace of mind and a stronger legal foundation. Whether you’re just forming your LLC or need to revise an outdated agreement, we’ll help you put the right structure in place.
Contact Patrick, Harper & Dixon, LLP today to schedule a consultation and protect the future of your business.
