If you are starting a business in Kansas, it is important to have an operating agreement in place. An operating agreement is a document that outlines the ownership, management, and operating procedures of a Limited Liability Company (LLC).
Why is an operating agreement necessary?
While Kansas law does not require an LLC to have an operating agreement, it is highly recommended. Without an operating agreement, the LLC is subject to the default provisions of the state`s LLC laws. These default provisions may not reflect the unique needs of your business.
In addition, having an operating agreement can help avoid disputes among LLC members by clearly outlining each member`s rights and responsibilities.
What should be included in an operating agreement?
An operating agreement should include the following:
1. Identification of the LLC: The operating agreement should list the name and address of the LLC, as well as the names and addresses of all LLC members.
2. Management: The operating agreement should specify who will manage the LLC (either the members themselves or a designated manager).
3. Capital contributions: The operating agreement should outline each member`s initial capital contributions, as well as the method for future contributions.
4. Profits and losses: The operating agreement should specify how profits and losses will be allocated among LLC members.
5. Voting rights: The operating agreement should outline how voting rights will be distributed and exercised among members.
6. Dissolution: The operating agreement should include provisions for how the LLC will be dissolved if necessary.
7. Transfers of ownership: The operating agreement should specify the procedures for transferring ownership interests in the LLC.
How to create an operating agreement?
An operating agreement can be created by the LLC members themselves or with the help of an attorney. Online legal services such as Rocket Lawyer and LegalZoom also offer customizable operating agreement templates.
Once the operating agreement is drafted, it should be reviewed and signed by all LLC members. It is also recommended to keep a copy of the operating agreement with the LLC`s business records.
In conclusion, an operating agreement is an essential document for any LLC in Kansas. It provides clarity and protection for LLC members and allows for a smooth operation of the business. Take the necessary steps to create an operating agreement to secure your LLC`s future.