Specific Business Provisions included in LLC Operating Agreement

I have been surprised to see how many LLC owner/members do not reduce the “deal” or even portions of the “deal” to writing in the LLC Operating Agreement (or anywhere else). They think, and perhaps understandably so, that whatever is in the LLC Operating Agreement is either all they need or all that is supposed to be in an LLC Operating Agreement.

Now that I draft my own LLC Operating Agreements I offer to add a provision, section, or attachment on the “deal”. When I organized “Form” LLCs I did not modify the operating agreements to reflect specific business provisions (see Why “Form” LLC Operating Agreement Are Not Usually Modified).

If the LLC is a business and some or all of the LLC owner/members are to work the business, I offer to include specific LLC Operating Agreement provisions addressing the particular business’s operating costs, employees, LLC owner/members’ work hours, vacation, and such. If it is a matter of how the LLC owner/members are to divide costs or profits, that can be drafted into the LLC Operating Agreement as well.

The practical effect of this is 1) to have LLC owner/members consider these issues up front and to have them reach a consensus as to how each issue will be handled and 2) to give them something in writing to help assure the business really does work that way in the future.

Any business planning that my LLC organization promotes is good for my clients.

“Through his (Lincoln’s) reading of the Bible and of Shakespeare and of a few other books he seemed to have attained a remarkable skill in the use of words in spite of the fact that any formal education he had received totaled less than a year in his whole life. This practice in drafting illustrates the truth that the best form of education is to put one’s own words on paper.” Arthur L. Goodhart, Lincoln and the Law, 50 ABAJ 433 (May 1964) , p.436.