A Limited Liability Company (LLC) is a separate legal entity that can conduct business just like a corporation with many of the advantages of a partnership. It is taxed as a partnership. Its owners are called members and receive income from the LLC just as a partner would. There is no tax on the LLC entity itself. The members are not personally liable for the debts and obligations of the entity like partners would be. Basically, an LLC combines the tax advantages of a partnership with the limited liability feature of a corporation.
An LLC is formed by filing articles of organization with the secretary of state in the same type manner that articles of incorporation are filed. The articles must contain the name, purpose, duration, registered agent, and principle office of the LLC. The name of the LLC must contain the words Limited Liability Company or LLC. An LLC is a separate legal entity like a corporation.
Management of an LLC is vested in its members. An operating agreement is executed by the members and operates much the same way a partnership agreement operates. Profits and losses are shared according to the terms of the operating agreement.
The Illinois Operating Agreement is a legal document that outlines the internal workings and management structure of a limited liability company (LLC) in Illinois. It is specifically designed for states that have adopted the Uniform Limited Liability Act (UCLA) and the Revised Uniform Limited Liability Act (SULLA). This agreement is essential for LCS as it provides clarity on key aspects such as member roles, decision-making processes, profit and loss distribution, and other operational policies. Under Illinois law, there are two main types of operating agreements for LCS that have adopted UCLA and SULLA: 1. Basic Illinois Operating Agreement: This agreement lays out the core provisions necessary for the formation and operation of an LLC in the state, based on the principles outlined in UCLA. It typically includes sections detailing the purpose of the company, the powers and limitations of the members and managers, procedures for member meetings, voting rights, and guidelines for capital contributions. 2. Revised Illinois Operating Agreement: This agreement incorporates additional provisions and updates based on the changes made in SULLA. SULLA contains several improvements and updates to UCLA, aiming to provide greater flexibility for LCS and aligning them more closely with modern business practices. The revised operating agreement may include provisions related to indemnification of members and managers, expanded language on fiduciary duties, and enhanced provisions for dispute resolution. In both types of Illinois operating agreements, it is crucial to include key provisions such as the LLC's name and principal place of business, the duration of the LLC, how new members can be admitted, how profits and losses will be allocated, and procedures for amending or terminating the agreement. Additionally, the operating agreement should outline the rights and responsibilities of the members and managers, including their voting powers, capital contributions, and the roles they play in the decision-making process. Overall, the Illinois Operating Agreement for states that have adopted UCLA and SULLA plays a vital role in defining the internal structure and functioning of an LLC. It ensures that all members are on the same page regarding operational policies, management, and decision-making. It is strongly advised for LCS in Illinois to draft a comprehensive operating agreement tailored to their specific needs within the framework of UCLA and SULLA laws to mitigate potential conflicts and establish a solid foundation for the business.
