Does my LLC need an Operating Agreement?

May 8, 2023

You’re an entrepreneur wanting to start a business and form a limited liability company (“LLC”) in Missouri. You know that an LLC is a popular type of business entity for startups because it offers liability protection for members while it provides flexibility in decision-making formality and allows the company to choose how to be taxed (e.g., like a partnership or a corporation).

You know that Articles of Organization need to be filed with the Secretary of State. But do you really need an Operating Agreement? Although the Missouri LLC Act may not expressly require an Operating Agreement, it assumes you have one. And an Operating Agreement is important, even for single-member LLCs. Other reasons exist, but these three reasons come right to mind:

1. An Operating Agreement demonstrates business formality—i.e., that you run the company like a business and not a hobby. This will help you in case an adversary asks a court to “pierce the veil” and impose liability on you as a member.

2. An Operating Agreement defines the management structure of the company—i.e., whether management is by the members or by a manager.

3. An Operating Agreement lets the members plan ahead. Instead of the default rules of the LLC Act, your written plan will be applied when good things happen—like you want to add members—or when things happen that members would rather not think about—e.g., a member leaves (or dies) or the company dissolves.

So, while the technical answer to whether a Missouri LLC is required to have an operating agreement may be “no,” the smart answer is “yes.” A business lawyer in Kansas City will be able to draft an effective operating agreement for your company to meet your business objectives.

Disclaimer: This communication is for informational purposes only and neither provides legal advice nor forms an attorney-client relationship. The choice of a lawyer is an important decision and should not be based solely upon advertisements.

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