Are operating agreements necessary for LLCs, too? No, however it is strongly advised that every LLC have one in place. This agreement can shield the LLC’s limited liability status, prevent disagreements between members, and define roles and obligations. Can you create your own operational contract? Yes, a member of an LLC can create their own operating contract. However, it is advised that they get legal counsel to make sure the agreement is binding law and addresses all pertinent issues about the operation of the LLC.
How are LLCs taxed in Michigan, also? In Michigan, LLCs may also be liable to federal taxes in addition to state taxes, such as the Michigan Business Tax. However, LLCs have the freedom to select their federal taxation method. They can be taxed as a S corporation, C corporation, partnership, or sole proprietorship. Do you submit operational agreements? The state of Michigan does not require operating agreements to be filed with them. However, LLC owners must make sure that all members have access to a copy of the operating agreement and keep it on file.
Finally, although though an operating agreement is not mandated by Michigan law, it is strongly advised that every LLC have one in place. This agreement can shield the LLC’s limited liability status, prevent disagreements between members, and define roles and obligations. Although LLC owners are free to create their own operating agreements, it is advised that they consult a lawyer to make sure the contract is binding and addresses all pertinent issues. In Michigan, LLCs may also be liable to federal taxes in addition to state taxes, such as the Michigan Business Tax. Although operating agreements are not required to be submitted to the state of Michigan, LLC owners should make sure all members have access to a copy of the document and keep it on file.
Outlining the ownership and management structure of the business, as well as the duties and responsibilities of each member, should come first when writing an operating agreement for an LLC. Include clauses describing how earnings and losses will be allocated, how the business will be run and managed, and how disagreements will be settled. To make sure that all relevant clauses are included and that the agreement conforms with Michigan state laws, it could be good to speak with a lawyer or use a template.