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.
In Virginia, the Operating Agreement is a legal document that outlines the organization and operations of a limited liability company (LLC) in compliance with the Uniform Limited Liability Act (UCLA) and the Revised Uniform Limited Liability Act (SULLA). The agreement defines the rights, responsibilities, and obligations of the LLC's members and managers. It is a vital document that governs the internal affairs of the LLC and provides a framework for decision-making and governance. Under the UCLA and SULLA, different types of Virginia Operating Agreements can be established based on the specific needs and preferences of the LLC. These types may include: 1. Single-Member Operating Agreement: This agreement is suitable for LCS with a sole owner or member. It outlines the rights and obligations of the single member, such as decision-making authority, profit and loss allocation, and member withdrawal or dissolution procedures. 2. Multi-Member Operating Agreement: This agreement is designed for LCS with multiple members or owners. It details the roles and responsibilities of each member, voting rights, capital contributions, distribution of profits and losses, admission or removal of members, and dispute resolution mechanisms. 3. Manager-Managed Operating Agreement: In LCS where the members designate certain individuals or entities as managers to handle day-to-day operations, a manager-managed operating agreement is necessary. This agreement outlines the authority and duties of the managers, the rights and obligations of the members, and other governance provisions. 4. Member-Managed Operating Agreement: When all members of an LLC participate in the management and decision-making processes, a member-managed operating agreement is appropriate. This agreement outlines the democratic governance structure, voting procedures, member duties, and other key provisions related to LLC operations. Regardless of the type, a Virginia Operating Agreement for States who have Adopted the UCLA and SULLA typically includes the following essential components: — LLC name, purpose, and principal place of business — Duration and dissolution procedures of the LLC — Initial contributions of the members or owners — Allocation of profits and losses among the members — Voting rights and decision-making procedures — Rights and duties of the members or managers — Transfer or assignment of ownership interests — Procedures for amending or terminating the operating agreement — Procedures for resolving disputes and conflicts among members — Indemnification and liability provisions It is essential for Virginia LCS governed by the UCLA and SULLA to carefully draft and adopt an operating agreement that accurately reflects the members' intentions and effectively governs the internal affairs of the company. This ensures a clear understanding of the LLC's operations and minimizes potential conflicts or misunderstandings in the future.
