Cedar Rapids Operating Agreements Lawyers
Operating agreements form the foundation of any limited liability company (LLC). While operating agreements are not required under Iowa state law for LLCs, it is a good idea to have one in place as you conduct your business in Cedar Rapids. An operating agreement outlines the financial and operation decisions that govern the company and also serve to reduce personal liability for business owners. Cedar Rapids operating agreements lawyers know that these contracts can be crucial to protect the interests of business owners and their businesses.
At Arenson Law Group, PC, our Cedar Rapids legal team has years of experience constructing competent operating agreements for LLCs. If you are looking to establish an operating agreement, our lawyers are prepared to help you create an agreement that reflects the goals and structure of your business.
How an Attorney can Help with Operating Agreements
Operating agreements for LLCs cover a wide variety of topics, including liability, management, and any other relevant terms. When drafting an operating agreement, an experienced business law attorney can make the process much simpler. Some of the ways in which our lawyers can help Cedar Rapids businesses include:
- Understanding legal terms
- Ensuring that all terms of the agreement are legal
- Writing the terms of the agreement as you request
- Filing paperwork with the state and federal government on your behalf
Moreover, our lawyers can answer any questions that you have about establishing an operating agreement or conducting business in Cedar Rapids.
Frequently Asked Questions About Operating Agreements
Does my LLC need an operating agreement?
Even when an operating agreement is not necessarily required (and most states do not require operating agreements), it is still usually beneficial to most LLCs. Even single-member LLCs will still want an operating agreement for a number of reasons, including establishing a basic description of operations that describes the operations of the LLC and ensures appropriate records are kept for all proceedings.
An operating agreement will also keep an LLC separate from an owner for liability and tax purposes. Additionally, an operating agreement provides clauses related to what will occur if an owner dies or is suddenly unable to run a business. All of these considerations are important because without an operating agreement, then a business becomes subject to the default rules of the state in which the LLC is organized, meaning the state, rather than you, will dictate how business assets are divided.
What is a registered agent?
The registered agent is the person who is designated to receive process of service notices relating to an LLC. Even when a registered agent is not required, it is usually beneficial for an LLC to have a registered agent. The person must be located in the same state that the LLC was established in and they also need to be available during traditional business hours.
An LLC cannot be its own registered agent, but an employee or owner usually can be. The registered agent receives all tax and other legal documents relating to the LLC, and ensures that you are aware of any major payments, lawsuits, or judgments.
You will want to consider whether you want to risk possibly being served a lawsuit in front of employees and customers if you decide to make your registered agent one of your own employees.
Registered agents also usually receive other types of “junk” mailings and solicitations that you may prefer to try to keep outside of your office. When an LLC is going to do business in multiple states, it can be beneficial to have a registered agent that is capable of acting in that capacity in all states.
Are witnesses required to sign the operating agreement?
Not necessarily, but it is still wise to have all signatures notarized to affirm their authenticity. Certain banks or other institutions may impose stricter legal requirements than some state offices, so documents that are not notarized may not be accepted. Having a notary present for any operating agreement signatures can often help you avoid any unnecessary delays in doing business.
What are capital accounts?
Capital accounts are important to LLCs because they reflect the equity of the members in LLCs. A capital account is a running total of all members’ ownership and contributions. Every member of an LLC typically has their own capital account, and the member’s capital account increases or decreases in proportion to the profits or losses of the LLC.
These accounts may be affected by taxes, changes in capital structure, or other financial events. Capital accounts are increased through initial investments, shares of profits, and additional contributions. They may be decreased because of withdrawals for personal use or shares of losses by members.
Capital accounts are typically a major concern for most members because they reflect the combined initial investments from members, additional contributions by members to the business, the members’ shares of profits or losses, and how money or property from the LLC will be distributed.
Why do new LLC members need to review the LLC operating agreement?
An LLC operating agreement contains information that any person will want to become aware of before agreeing to be a member. The operating agreement addresses a number of important concerns, including contributions by each member and expected future contributions, when they will be due, and what happens when they are not made.
The operating agreement also specifies how profits and losses are allocated among members and it addresses stock ownership issues. An operating agreement also provides an understanding of how an LLC is managed, whether it is being managed by all members, a sole manager, or a group of managers.
The agreement should also specify how officers for the LLC are appointed, what the voting rights of all members are, and what indemnification protections are offered for people handling the management and operations of the LLC.
Restrictions on transfers of membership interests could also be contained in an operating agreement as well as procedures for a number of other business concerns, such as member meetings and business dissolution.
Consult an Operating Agreement Lawyer in Cedar Rapids
If you are considering an operating agreement for your business, there are certain legal steps you will need to follow. At Arenson Law Group, PC, our lawyers are prepared to create an operating agreement that represents the interests of you and your company. For more information about operating agreements in Cedar Rapids, speak with an experienced business lawyer by calling (319) 363-8199 today.