When starting a business in Illinois, one of the first important steps is to create an LLC operating agreement. An operating agreement is a legal document that outlines the structure and operations of your LLC. It also serves as a contract between the members of your LLC and details each member`s role, responsibilities, and rights.
In Illinois, LLCs can be either member-managed or manager-managed. A member-managed LLC is managed by its members, while a manager-managed LLC is managed by one or more designated managers. This article will focus on the Illinois member-managed LLC operating agreement and what you need to include in it.
1. Business Name and Purpose: Start with the basics of your LLC – its name, address, and purpose. The purpose of your LLC should be broad enough to allow for future business activities.
2. Capital Contributions: This section outlines how much each member will contribute to the LLC and how the contributions will be made. It also specifies whether members can make additional contributions in the future.
3. Allocations and Distributions: This section outlines how profits and losses will be divided among the members. It also specifies how and when distributions will be made.
4. Management and Voting: In a member-managed LLC, all members have an equal say in the management of the LLC. This section outlines how decisions will be made and how voting will be conducted.
5. Membership Changes: This section outlines the process for adding and removing members from the LLC.
6. Transfer of Interests: This section outlines how members can sell or transfer their interests in the LLC.
7. Dissolution: This section outlines the process for dissolving the LLC and distributing the remaining assets.
In addition to these sections, your operating agreement may also include provisions for meetings, record-keeping, fiduciary duties, and dispute resolution.
Creating an LLC operating agreement is a crucial step in starting a business in Illinois. It helps ensure that all members are on the same page regarding the operations and management of the LLC. Remember, it`s always a good idea to consult with a legal professional to ensure your operating agreement is legally sound and protects the interests of all members.