If you are planning to form an LLC in Michigan, it is essential that you have a well-crafted operating agreement in place. An operating agreement is a legal document that outlines the roles and responsibilities of the LLC`s members and their ownership rights.
In Michigan, the default LLC operating agreement is the state`s standard agreement, which is created automatically when you file your LLC formation documents with the state. However, relying solely on the Michigan default LLC operating agreement may leave gaps in your legal protection and could lead to disputes among members.
The Michigan default LLC operating agreement includes basic provisions, such as the LLC`s name, business purpose, and the names and addresses of the members. However, the agreement does not cover important details such as ownership percentages, member contributions, and the distribution of profits and losses.
Additionally, the default agreement does not provide any guidance on what happens in the event of member disputes, how new members can be added, or how the LLC can be dissolved. These are all critical areas that must be addressed in the operating agreement to ensure the smooth operation of the LLC.
To avoid these potential issues, it is recommended that you work with a knowledgeable business attorney to draft a customized operating agreement that meets the needs of your specific LLC.
A customized operating agreement will provide clear expectations for all members, helping to minimize misunderstandings and conflicts that may arise in the future. It can also help to protect the LLC`s liability by defining the members` roles in the company and specifying how the LLC is managed.
In conclusion, while the Michigan default LLC operating agreement offers a starting point, it is crucial to work with a qualified business attorney to create a customized operating agreement that fits your LLC`s unique needs. Doing so will help to ensure that your LLC is well-protected and operating smoothly.
