Linnemeyer Law, LLC represents businesses and individuals in the preparation, review and negotiation of LLC operating agreements. Attorney Jonathan Linnemeyer has prepared and reviewed hundreds of operating agreements for all types of businesses. Linnemeyer Law, LLC can assist with a simple operating agreement for a newly-formed single-member LLC or a complex operating agreement for an LLC with multiple members and multiple classes of membership interest .
LLC OPERATING AGREEMENTS
An operating agreement is a confidential written agreement between the members (owners) of a limited liability company (LLC) that governs the business and affairs of the company. A well-written operating agreement will prevent future disputes among the members of an LLC and provide certainty with respect to how the company will be governed. Common clauses of an LLC operating agreement include:
- Percentage of ownership of each member
- Vesting of ownership
- Voting rights
- Management rights and duties
- Member rights and obligations
- Payment of distributions and allocation of profits
- Transfer restrictions and buyout or buy-sell provisions
Similar to a partnership agreement or a shareholder agreement (for a corporation), an LLC operating agreement should be adopted as soon as possible once the LLC is formed. An operating agreement is not required under Illinois law, however, without an operating agreement, an Illinois LLC will be subject to the default provisions under the Illinois Limited Liability Company Act. An LLC operating agreement is the most important contract between the members of an LLC and it is important to have an agreement that suits the specific needs of the LLC owners.
FREQUENTLY ASKED QUESTIONS:
Does a single-member LLC need an operating agreement?
In single-member LLCs, an operating agreement is a declaration of the structure that the member has chosen for the company and is sometimes used to prove in court that the LLC structure is separate from that of the individual owner and thus necessary so that the owner has documentation to prove that he or she is indeed separate from the entity itself.
How Much Does It Cost?
Operating agreements are customized to suit each client’s needs and business type. Operating agreements can vary greatly in length and complexity. Most operating agreements are prepared on a flat fee basis. After receiving your information, Linnemeyer Law will provide a quote for the preparation of your operating agreement.
Customized single-member LLC operating agreements start at $400. Multi-member operating agreements start at $1,200.00. Operating Agreement review is done on an hourly basis, with a fee quote offered following our initial agreement review.
What is a Member of an LLC?
A member is an owner of the LLC. If there is just one member, then the LLC is a single-member LLC. If there is more than one owner of the LLC, the LLC is a multi-member LLC. Members may or may not have voting rights and management rights in an LLC, depending on the terms of the operating agreement and the LLC’s Articles of Organization.
What is a Manager of an LLC?
A manager is an individual or entity with authority to manage the business and affairs of a manager-managed LLC. Not all LLCs have managers. A member-managed LLC is managed by its members and does not have managers. A manager does not need to be a member (owner), although typically managers are members. Typically, the managers are elected by the members. A manager’s authority to manage the business of an LLC and enter into transactions on behalf of an LLC is governed by the LLC’s operating agreement. In absence of an operating agreement, each manager has authority to enter into all transactions on behalf of an LLC.
How is an LLC Taxed?
An LLC can be taxed as a disregarded entity, a partnership, an S-Corporation or a C-Corporation. By default, a single member LLC will be taxed as a disregarded entity for federal and state tax purposes. As the result of being “disregarded,” the LLC does not file a separate tax return. Rather, its income and loss is reported on the tax return filed by the single member. An LLC with multiple members is taxed as a partnership. An LLC taxed as a partnership must file an IRS Form 1065 partnership tax return. Additionally, the LLC must also give each member a Schedule k-1, showing each member's share of partnership income, credits and deductions. Since an LLC is a flow-through entity, each member then reports this on their individual 1040 and Schedule E. A single member LLC or a multiple member LLC may elect to be taxed as an S-Corporation (if it meets certain requirements) or a C-Corporation. This is accomplished by filing an election (form 2553 or 8832) with the IRS. The legal status of an LLC is not changed by filing an election to be taxed as a Corporation, it continues to function as an LLC for all other purposes. An LLC that elects to be taxed as an S-Corporation must file an IRS Form 1120S tax return and an LLC that elects to be taxed as a C-Corporation must file an IRS Form 1120 tax return.
Why Linnemeyer Law?
Value: We provide value-conscious legal services. We provide estimates at the start of a matter and seek approval when a material change occurs or when there is a mismatch between budget and billing, so the client knows the basis for our fees.
Excellence: Excellence is rare. We are detail-oriented. Attorney Jonathan Linnemeyer offers a unique mix of experience, knowledge and industry savvy to navigate through your legal challenges.
Responsive: We are responsive to clients’ needs and prompt in responding to communications. We understand that business moves quickly and that important matters can’t wait until the next business day.
Easy: We value your time. We handle the details so you can focus on your business.
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