DOES IT MATTER IF A SINGLE MEMBER LIMITED LIABILITY COMPANY HAS FAILED TO ADOPT A WRITTEN OPERATING AGREEMENT?

By John Kiritsis, Esq., CPA, MBA, MS, JD, LL.M

Kiritsis Law Group

212 922 0005

 

The adoption of a written operating agreement by a single-member limited liability company (SMLLC) is not required by law in all states, but it is highly recommended as it serves as a guide for the management and operation of the business. The operating agreement typically outlines the member's rights and responsibilities, tax treatment, and rules for decision-making and decision-making processes.

 

In states where it is not required by law, the default rules provided by the state's LLC statute will govern the SMLLC. However, if a written operating agreement has not been adopted, disputes may arise and it may be more difficult to determine the member's rights and responsibilities in specific circumstances. This may lead to unexpected legal and financial consequences, so it's generally best practice to have a written operating agreement in place.

Sources:

New York Business Corporation Law

New York Limited Liability Company

New York General Obligations Law

NYS Office of Professions

U.S. Constitution

 

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