A company agreement focusing on “the functionality of internal affairs” is obviously a document of key importance for business principals.
That fact is underscored by the U.S. Small Business Administration. The SBA augments its above reference to that agreement with an online narrative underscoring why a carefully drafted operational agreement is vital for limited liability companies.
We certainly endorse the agency’s core points at Cook Tillman Law Group. The deep legal team at our established Middle Tennessee law firm in Brentwood routinely crafts tailored operational agreements for diverse and valued clientele. We note on our website that, while such a contract is not legally required for a Tennessee LLC, “it can provide critical direction and protection for your company.”
For starters, an operating agreement is a legal blueprint addressing key aspects relevant to company structure, decision making and both ongoing/future management. It accomplishes these and additionally vital company goals:
- Clarifies LLC status and members’ protections against personal liability
- Sets forth governing provisions relevant to members’ ownership interests and voting rights
- Specifies the process for profit/loss distribution
- Cements verbal understandings with enforceable written language
The SBA article additionally notes that an operational agreement eliminates the potential for state authorities to step in with generic default rules for governing disputes and other matters. LLCs lacking operational agreements run that risk.
Tennessee business principals with questions regarding entity type/selection, contractual requirements, company protections and more can contact proven Nashville-area commercial law attorneys for guidance and diligent representation.