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.
North Dakota Operating Agreement is a legal document required for limited liability companies (LCS) formed in North Dakota that have adopted the Uniform Limited Liability Act (UCLA) or the Revised Uniform Limited Liability Act (SULLA). This agreement governs the internal operations, management, and decision-making processes of the LLC. It is essential to have a comprehensive and well-drafted operating agreement to establish clear guidelines, protect the rights and interests of members, and ensure efficient business operation. Under the UCLA, there are no specific types of operating agreements mentioned. However, the agreement should cover crucial aspects such as management structure, member contributions, profit and loss allocation, decision-making processes, voting rights, member withdrawal or transfer, dissolution procedures, and dispute resolution mechanisms. Furthermore, it may include additional provisions or restrictions based on the unique needs and goals of the LLC. The Revised Uniform Limited Liability Act (SULLA) adopted in North Dakota provides some additional flexibility and options regarding the operating agreement. Based on the SULLA, there are two primary types of operating agreements: 1. Oral Operating Agreement: SULLA allows for an oral operating agreement, which can be enforceable if there is sufficient evidence of its terms and existence. However, having a written agreement is highly recommended for avoiding misunderstandings and conflicts. 2. Written Operating Agreement: A written operating agreement is a more common and widely advised option. It ensures the terms of the agreement are clearly defined, reduces ambiguity, and provides greater protection for the members. It can be modified or amended in writing, allowing flexibility in adapting to changing circumstances and business needs. Keywords: North Dakota Operating Agreement, Uniform Limited Liability Act (UCLA), Revised Uniform Limited Liability Act (SULLA), limited liability company (LLC), internal operations, management, decision-making, guidelines, rights, interests, efficient business operation, management structure, member contributions, profit and loss allocation, decision-making processes, voting rights, member withdrawal, member transfer, dissolution procedures, dispute resolution mechanisms, oral operating agreement, written operating agreement, enforceable, terms, existence, written agreement, ambiguity, protection, modified, amended, flexibility.
