Starting an LLC in Georgia
The state of Georgia does not have strict laws concerning operating agreements. Also, it doesn’t require that the owner or owners draft one, nor does it require the Limited Liability Company keep a copy of it on hand if it does choose to have one. For this reason, some LLCs choose not to create one all together, or simply state that their operating agreement was a “verbal agreement”.Do you want to learn more? Visit official site
Although Georgia lacks monitoring, or implements any regulations on operating agreements it doesn’t mean that they are any less important or valuable. While Georgia state has no laws governing operating agreements, it would be in your best interest to draft one and keep a copy in your LLC kit, and another in a safe place of your choosing.
Here are a few important reasons:
It solidifies your company as a real business as oppose to a self-fulfilling hobby. It also protects your personal liability, and anyone else participating as a member. Yes, filing your articles of organization and creating an LLC does separate your personal assets from your business assets, but if debtors take you to court, having an operating agreement written up will secure your chances of the courts honoring your limited liability and not piercing your company’s corporate veil.
If there are other members, it also helps to protect you when disagreements arise. Verbal agreements are great between two good friends about an insignificant matter, but when it involves business and money, it’s difficult to prove something was agreed to verbally (issues such as roles, rights, and responsibilities). So be safe and put the agreements between the members in writing, this will help protect the interests of each member.
Your operating agreement clearly outlines your company’s management policies, and procedures among its members; it also documents their ownership percentages. Normally the percentage of ownership is equal to the capital contributions made by each member, but an LLC can divide ownership percentages anyway it sees fit. It is extremely important to annotate the terms and the percentage of each member’s ownership percentage in the operating agreement, because in some cases the ownership percentage is not equally dispersed according to the capital contributions.
This same concept also applies to the way an LLC allocates its profits and losses. If there is not an operating in place, then the LLC must operate by Georgia’s default rules listed in the Uniform LLC Act. The LLC act requires members to divide profits and losses equally even if each member did not invest equal amounts.
Lastly, in the event of the death of a member, any agreement on the reallocation of ownership should be expressly made within the agreement. An unexpected death can cause many problems within an LLC, and the dissolution of your LLC should not be one of them.