We previously posted about the pitfalls of not having internal governing documents for your business or failing to follow such documents. But what is the internal governing document for your business? If you already formed your business, hopefully, you took the time and made the effort to prepare the appropriate documents as follows;
- operating agreement for a limited liability company (“LLC”),
- bylaws or shareholder agreement for a corporation, or
- partnership agreement for a partnership.
If not, get in touch with us and we can help you remedy this issue
An operating agreement, bylaws/shareholder agreement or partnership agreement are the internal documents that set forth the rights and expectations of the owners of the business. These agreements will provide how decisions are made on behalf of the business and who has such authority, will declare how capital calls are made, what happens if an owner does not put in their proportionate share of any capital call, and will provide an outline as to how an owner can sell his/her ownership in the business. This is a truncated version of the issues tackled in such agreements – simply put, this internal governing document should clearly define how the business is run.
While there is a cost incurred in putting together the agreement governing your business, such cost is minimal in comparison to having to litigate with your business partners if disputes arise when you cannot see eye-to-eye on the direction of the business or how to handle the buy-out, for example. Involving an attorney at formation to ensure that your business is prepared for success provides significant value. Whether it be in Minnesota, Wisconsin, Iowa or Arizona, we have the experience to prepare your operating agreement, bylaws, shareholder agreement or partnership agreement to help guide your business from formation onwards.