General Information On LLC Operating Agreements in West Virginia
After you form your limited liability company, there are still some things that you may want to think about. One of the key places to start is by forming an operating agreement for your West Virginia LLC. By working with LLC Formations, you’ll put yourself above to radar, and formulating the agreement will be even easier. So read on as we dive into everything that you need to know about the LLC Operating Agreement!
What Is An LLC Operating Agreement?
Simply put, the West Virginia LLC Operating Agreement for a company is a legally binding document that clearly outlines the duties of members as well as the ownership arrangements. In essence, it allows owners to clearly indicate the working and financial relationships among the business owners of the LLC. The agreement is a legally binding document that is drafted for managers and members alike.
While LLCs tend to have their own agreements, the general contents will vary from company to company. From a general perspective, it usually contains the following sections:
* Voting and management
* Contributions (capital)
* Changes to membership
* Dissolution information
The organizational section of the agreement focuses on the company’s creation. It easily sheds some light on when the company was created and who the members are. Also, structural ownership is stated as well as the members and the units of the LLC that they own.
Voting And Management
As the name states, this section deals with voting and how the LLC will be managed. In most instances, the following usually applies:
* An LLC can be managed by a manager, or by one member, or even a group of members. However, this only stands out as long as the operating agreement specifies which member or members are allowed to have more say in the internal affairs.
* As far as the voting process is concerned, decisions are typically made through a regular voting process. For the most part, votes are given in a ton of ways. Some of these include one vote per ownership unit, one per member, or other mediums. As such, the operating agreement should indicate the number that is given according to the company.
The capital contributions section of the operating agreement takes note of the monetary contributions that were given by members to start the company. It also gives some insight as to how the members will go about raising more money as the life of the LLC progresses. Members can exchange their units for money if ever they should choose to do so.
At some point or the other, all company’s ensure both profits and losses which are generally shared among the members of the LLC. Some of these distributions include the following:
* Physical property
* Business assets
Changes To Membership
Within the life of the LLC, members will come and go and the membership section indicates the process involved in removing and adding new members to the LLC. It even makes suggestions on how members could transfer their ownership within the company. This is done to clarify what happens if a member goes bankrupt, if they die, or if two members get divorced.
While all good businesses start strong, there are several reasons why they could end up collapsing. In these rare instances, the company is forced to close its doors and things need to be dissolved. For most, this indicates the winding up of affairs.
Other Things You Should Know in West Virginia
While the mentioned sections are the most common, there are still some sections that can be looked at. However, this is purely dependent on the members or particular situations of the company. Members also think ahead and prefer to hold periodic meetings to either place holds on finances and other aspects. All of this can be successfully stated within the agreement.
The operating agreement is a good place for members to be aware of how company disputes will be dealt with. However, even if you begin with one operating agreement, the original can be tailored to suit as time goes.
Do I Need An Operating Agreement For My West Virginia LLC?
If you’re forming your LLC in any of the following locations, you’re required by law to have an operating agreement:
While several states have been left out of the list, it is still suggested that LLCs formulate an operating agreement. LLC Operating Agreements in West Virginia are needed for the following reasons:
* Business partners
* It prevents misunderstandings
* An operating agreement brings some form of credibility to the LLC even it only has one member
After you form your LLC, you’ll need to draft out an Operating Agreement. While the operating agreement isn’t always legally necessary, it saves you a lot of hassle in the future. Your operating agreement protects your company and it provides the members with some company guidance.