About LLC Operating Agreements In The State Of Georgia
Every owner of an LLC in the state of Georgia ought to put in place an effective operating agreement if they want to protect and preserve their business operations and practices. The state of Georgia doesn’t legally require these. However, putting an operating agreement into place does two things. First, it establishes clearly laid out rules and expectations to cover your LLC. Second, it establishes credibility for your organization as a legitimate legal entry.
What exactly is an LLC operating agreement in the state of Georgia?
What’s known as an operating agreement simply is just any legal document that illustrates the operating procedures and specific ownership structure of your LLC.
Your operating agreement needs to cover every topic listed in the following sections, and this applies whether you are just getting up and running as a single-member LLC or you’re starting a multi-member unit. A number of the following stipulations don’t have much actual impact or relevance to single-member LLC operations, although you still need to include them to be consistent with standards involving legal formality.
Organization: This covers when your LLC was originally and officially formed, just who the members are, as well as how the ownership is actually divided up. Organizations using a multi-member LLC model might use equal ownership structuring, but they can also designate different memberships with their own ‘ownership units’.
Management And Voting: This pertains to determining how an LLC is managed, either by one appointed manager or management by all members. Also, how will members undergo voting related to business matters? Usually, every member gets a single vote, although you can have some members get more voting power or less than others have.
Capital Contributions: This is the sum total of money every member personally invested into the business. This also happens to be the place where you put together your LLC’s approach towards generating extra future funds.
Distributions: How are profits and/or losses going to be spread out among members? The usual choice is even distribution among members, although you can divide them differently. Whatever you choose, detail it specifically in your LLC operating agreement.
Membership Structure Changes: If any member leaves your company, how will ownership and roles get transferred in the wake of such an event? You need to layout in advance what the process is for replacing and/or buying out any member in the governing documentation of your LLC.
Dissolution: If at any point every member within your LLC collectively decides that they don’t want to conduct business any longer, then you would need to dissolve the organization officially and completely. Outline a prospective process for the dissolution of your entire business, because this is one essential element to the whole operating agreement.
Why Do You Need To Have An LLC Operating Agreement In The State Of Georgia?
Regardless of what sort of Georgia LLC you create, you need to come up with an operating agreement covering it. These are some good reasons why:
First of all, the state recommends it. Chapter 11 Section 505 of the GA Corporations Code states that every member of an LLC in the state has the right to enter together into a specific operating agreement designed to regulated the company’s internal matters.
Second, it can prevent conflict within your business, keeping the peace between the partners. If you establish an LLC with multiple members, then putting together an operating agreement to govern internal conduct should help everyone avoid misunderstandings. Everyone will have clear ideas about the roles, expectations, and responsibilities of every team member.
Third, you’ll preserve your company status of having limited liability. If you are a single-member LLC where you are the sole owner, then putting an operating agreement into place helps make sure that your company’s limited liability status is preserved by courts and other officials. It also boosts the credibility and reputation of a business as a whole.
We partnered up with a reputable professional service to provide both free-to-use operating agreement templates as well as an Operating Agreement Tool you can customize.
Our template samples include the following:
Single-Member Operating Agreements: These are for any LLC established by a sole individual.
Multi-Member (Manager-Managed) Operating Agreements: These are for LLCs created by more than one member that choose to appoint one manager or more to deal with the business’s daily affairs.
Do I have to have an operating agreement?
Yes. You don’t actually file your company’s operating agreement specifically with the state of Georgia, but having one in place is an effective means of keeping control over your LLC if chaos or chance presents itself.
When is the best time to create an operating agreement?
It’s typically smart to put together your operating agreement prior to filing Articles of Organization. However, the state of Georgia doesn’t exactly dissuade LLCs from putting it off until the whole process of formation has run its course. You should know that certain banks and financial institutions will mandate that you submit your operating agreement before you are allowed to create any business accounts.
Do I have to file the operating agreement of my LLC with Georgia’s state government?
No, you do not. Operating agreements need to be retained specifically by your LLC members. You can try submitting your LLC’s operating agreement with the state of Georgia’s Corporations Division, but they’re just going to return it to you unfiled.