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 New York Operating Agreement is a legally binding contract that establishes the rights, duties, and obligations among LLC members in the state of New York who have adopted the Uniform Limited Liability Act (UCLA) and the Revised Uniform Limited Liability Act (SULLA). These agreements are specifically designed to govern the internal operations and management of a limited liability company (LLC). They outline the rules and regulations that LLC members must follow in order to maintain the structure, decision-making processes, and financial matters of the business. There are two main types of New York Operating Agreements that are applicable to states who have adopted the UCLA and SULLA: 1. New York Operating Agreement under the Uniform Limited Liability Act: This agreement adheres to the provisions laid out in the UCLA, a set of laws enacted by each state to provide a standardized framework for LCS. It encompasses key aspects such as member rights and responsibilities, profit and loss allocations, decision-making authority, voting rights, capital contributions, and distributions. 2. New York Operating Agreement under the Revised Uniform Limited Liability Act: This agreement follows the provisions outlined in the SULLA, an updated version of the UCLA that incorporates modern business practices and legal considerations. It encompasses the same fundamental aspects as the UCLA agreement, but may include additional clauses or modifications to further suit the needs of LLC members under the revised act. It is essential to note that the specific contents of a New York Operating Agreement may vary depending on the preferences and requirements of the LLC members. However, some common provisions typically found in these agreements include: 1. LLC Purpose: Clearly defining the purpose and objectives of the LLC. 2. Member Roles and Responsibilities: Clearly identifying the roles and responsibilities of each member, including management authority, decision-making processes, and their participation in the LLC's operations. 3. Capital Contributions: Outlining the initial contributions made by each member, as well as any future obligations for additional capital. 4. Profit and Loss Allocation: Specifying how profits and losses will be divided among members, typically based on their ownership percentages. 5. Changes in Ownership: Addressing procedures for admitting new members, transferring ownership interests, or withdrawing from the LLC. 6. Distributions: Detailing how profits will be distributed to members, including frequency, method, and any restrictions or requirements. 7. Dissolution: Outlining the conditions under which the LLC may be dissolved, as well as procedures for winding up business affairs and distributing remaining assets. 8. Dispute Resolution: Establishing mechanisms for resolving disputes among members, such as mediation or arbitration, to avoid costly litigation. 9. Operating Procedures: Defining the day-to-day operational procedures, decision-making processes, and management structure within the LLC. A well-drafted New York Operating Agreement is crucial for LCS in states that have adopted the UCLA and SULLA, as it helps prevent conflicts, provides clarity, and protects the interests of all members. It is strongly advisable to consult with a qualified attorney to create an operating agreement that caters to the specific needs and goals of the LLC.
