LLC Operating Agreement

Categories: Incorporation

We started quilting in college as a way to deal with exam stress. We eventually started selling our quilts, because (a) it turns out we’re actually pretty good at the whole quilting thing, and (b) our tiny apartment was becoming overrun with quilts. (Looooots of exam stress.) The demand for our exquisite creations became so great that we ended up contracting other quilters to help us fill our orders, and now this whole thing has snowballed to the point that we’re going to go ahead and turn it into a real-life business. An LLC, to be exact, and we’re going to call it Quintessential Quilts, because everyone loves alliteration.

Anyway, one of the first things we’re going to need to do is set up our LLC operating agreement. This is a customized document that outlines how Quintessential Quilts is going to, well, operate. It covers everything from daily operations to what happens when one of our members leaves the company. It also answers other questions, such as: Where is the company HQ located? What is Quintessential Quilts’ purpose and mission? What are the responsibilities of the LLC’s members? How much of the company does each one of them own? What happens if some outside entity wants to buy us out? How are profits going to be distributed?

Just as a heads-up, some states require LLCs to have a signed operating agreement before they can get down to business, and the requirements might differ slightly depending on which state we’re talking about. But even if our home state doesn’t require one, it’s not a bad idea to put one together anyway. After all, we’ve worked hard to turn Quintessential Quilts from a stress reliever into a money maker, and we want to make sure that we’re setting ourselves up for success...and protecting what we’ve created.

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Finance: What is an LLC?4 Views

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finance a la shmoop. what is an LLC? LLC no that's not a rapper, that's a limited

00:10

liability company or look as professionals in the business pronounce

00:15

it. well why do you want one? because limiting your liability is a [man explains]

00:19

good thing if you're the one potentially liable for that stooge who slips on a

00:24

banana peel in your lobby waiting area and then Sue's you and wins. if you start

00:29

building your own company as an individual and not as an LLC and you get

00:34

sued for whatever, and you lose well you could lose everything you own.

00:38

that is the lawyers will come after your house your car your poodle your signed

00:43

Mila Kunis photograph collection, and legally well they'll be entitled to take

00:48

all of it. if you have existed under the legal structure of an LLC however, well [legal structures pictured]

00:53

the most you can be liable for is the assets of the business itself. yes

00:58

they'll take the company computer the remaining 17 months of lease on the

01:02

company building, and all your staplers and posted thingies but legally they

01:06

won't be able to go after your home your car your poodle or your autograph

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collection. Mila is safe whew. so LLC's are a good thing they cost only a few

01:16

hundred bucks to set up these days, hi LegalZoom. so before you start up a lava

01:20

lamp company of your own think about setting up an LLC first. Mila and your [lava lamps in a row]

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poodle gregory will thank you for it.

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