Michigan LLC Operating Agreement
A Michigan LLC Operating Agreement is a legal document outlining the rules governing your limited liability company. An operating agreement is an internal document, meaning you don’t have to file it with the Michigan Department of Licensing and Regulatory Affairs (LARA). In fact, it’s entirely optional. So why is having an operating agreement important? Well, there are three primary reasons:
1. A well-written operating agreement establishes how your company will function—how monies are distributed or reinvested, member/manager responsibilities, and how the business should be dissolved, should the time ever come.
2. You will likely need an operating agreement to open a business bank account. An operating agreement lends credibility to your company, demonstrating that you are an organized, serious business entity.
3. A solid operating agreement will also protect you and your business should you ever face legal action. Your operating agreement can short-circuit internal disputes by spelling out the business structure and operations. Even better, an operating agreement will keep attorney billable hours at bay if lawyers get involved.
What Should Be Included in My Michigan Operating Agreement?
How you go about drafting an operating agreement from scratch is your prerogative, but be careful—not all operating agreements are created equal. We provide customizable, free templates because we want you to succeed. Our operating agreement template covers the essentials:
Formation process: Verifies the existence of the company and where to find key information regarding the business
Capital contributions: Explains how members buy into the company
Profits, losses, distributions: Allocates membership percentages and explains how everyone gets paid
Management: Provides an overview of the duties and responsibilities of the person (or people) in charge
Compensation for expenses: Outlines the process for claiming reimbursement for out-of-pocket expenses
Bookkeeping: Explains how financial records are kept and what constitutes your fiscal calendar
Transfer of interest: Limits the ability of allowing strangers to buy into the LLC
Dissolution: Outlines the process and obligations of ending the LLC
With our multi-member LLC operating agreement, we also have a section covering bank accounts, so everyone knows how money is kept and accessed.
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Types of Operating Agreements
When it comes to LLC operating agreements, one size does not fit all. We have created three distinct templates for operating agreements depending on your LLC’s management structure. Simply select the one that best fits your company and fill it out. You’ll be glad you did.
Michigan Single-member Operating Agreement
A single member needs an agreement? Yes! Even though you don’t anticipate disputes with yourself, banks still like to see an operating agreement. We made this form super easy to fill out. So, take five minutes and do things right.
Michigan Multi-member Managed Operating Agreement
A multi-member LLC has more than one owner. Anytime you have more than one person in a business, it’s a good idea to have some ground rules. A multi-member LLC operating agreement documents the powers and duties of each member. If a dispute ever arises, the operating agreement becomes the go-to document to resolve the conflict. Our free operating agreement template helps your company stay organized and stay on track for success.
Michigan Manager-managed Operating Agreement
If you have a manager-managed LLC, we strongly encourage having an operating agreement. A manager-managed LLC operating agreement needs to clearly outline the role of each manager and member of the LLC. In addition, your operating agreement should outline the usual day-to-day operations. Our free operating agreement template will give your manager-managed LLC a firm foundation and clear guidelines for members and managers alike. Do yourself a favor and fill out this document.