While each state has its own laws regarding operating agreements, Georgia business law does not specifically require LLCs to have a Georgia operating agreement. However, it is wise to draft one, since the operating agreement is arguably the one document that provides significant legal protection to members of any partnership or corporation. In my Atlanta, Georgia Business Law firm, I have seen many clients come to me with serious issues stemming from a failure to draft this agreement, especially in family run businesses. Neglecting to draft this document before or upon creating a partnership or corporation often results in costly and time-consuming litigation.
The Georgia operating agreement allows you to define the LLC’s financial structure and working relationships between members. Key items to be addressed and defined by the agreement are percent ownership of each member, duties and rights of each member, voting power of the members, allocation of profits and losses, the management model and rules for meetings and voting. Additionally, the operating agreement will include provisions that outline not only what will occur if the business is sold, but also what will happen if a member dies, becomes incapable of performing the stated duties, or wants to sell their share of the business.
Although an operating agreement in Georgia can be oral (for multi-party LLCs only), it is always best to prepare it as a formal written document. In Georgia, the preparation of a written operating agreement should not be overlooked for several important reasons. It will help limit misunderstandings between members, ensure that the business is run by the rules established by the owners (not by the default rules of Georgia statute) and it will protect the company’s limited liability status (by preventing “piercing the corporate veil“). Protecting the company’s limited liability status is especially important if one person owns the LLC. With a properly drafted operating agreement, the one-person LLC can easily defend its status as an LLC in court proceedings, and the owner can avoid personal liability issues.
To properly draft an operating agreement that meets the unique attributes of your business, it is important to consult with a qualified Atlanta, Georgia Business attorney. The lawyers at The Libby Law Firm represent all types of businesses, from sole proprietorships to large multi-member partnerships. Please feel free to call our Georgia Business Law Firm at (404) 467-8611 to discuss your options. The main office of The Libby Law Firm, LLC is conveniently located in the Buckhead section of Atlanta, Georgia near the intersection of Piedmont and Roswell Roads. You may also meet with one of our Georgia lawyers in our Marietta office. You may also communicate with us by sending a message through our confidential Contact Us form.