What is an operating agreement?

An Operating Agreement is a legal document used to define the ownership and operating procedures of a business in the state of South Carolina. It is a contract between the members of a Limited Liability Company (LLC) or between the Partners of a Partnership. An operating agreement should include details such as the member’s ownership percentages, their roles in the business, their profit and loss distribution, how to handle new members, and how to dissolve the business. The operating agreement is important for a business in South Carolina because it establishes the ground rules for the company. It specifies the rights and responsibilities of the members and sets up a structure for how decisions are made and disputes are settled within the company. It can also protect the members from personal liability by establishing separate legal presence for the company. In South Carolina, an operating agreement is generally required for LLCs, but not for Partnerships. However, having an operating agreement is recommended even for Partnerships because it can help prevent disputes and provides clear guidelines for resolving conflicts. Additionally, having an operating agreement can help the business when applying for a business loan or when filing taxes.

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What is an operating agreement?

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