How To Write A Small Business Operating Agreement

A forced perspective view from the end of a conference table, with several people seated along both sides of the table while a person writes on a white board at the far end of the table

An operating agreement is an important document that details how your business is to be run and managed, clearly stating the rules and regulations by which your business will be run. It includes the rights of partners, outside contractors, and more. While writing an operating agreement should be fairly straightforward, there are a few items that should be included that will make your business operate more smoothly. If you need help drafting an operating agreement, our small business consulting services could be right for you. Set up an appointment today to talk about your small business goals and read on for a few tips about writing an Operations Agreement.

Ownership Parameters

If your business has partners or a board, your Operating Agreement should include the names and titles of everyone involved, as well as each person's ownership percentages. In order to properly determine benefits, responsibilities, profits, losses, liabilities, and assets, this information will be essential, as these aspects are formulated using each member's ownership percentage. It will be important to get all co-owners, members, and partners to work together to create your Operating Agreement so everyone is up-to-date and is properly compensated.

Rights & Responsibilities

The rights and responsibilities of each member should be outlined clearly, including voting rights, requirements of each role within the company, salaries, and duties of each role. This section clearly details each members' role in the company. It is also where determinations are made regarding how much sway each member has in decision making that impacts the company, its members, and other stake holders.

Membership Rules

Members of your board or partners may eventually want to move on to other projects, so it is important to outline how people can leave your membership and the process for joining, as well. Having a detailed procedure in place for onboarding or offboarding members may not even seem like something that could happen right now, but the future is unknown and preparation is key to smooth transitions.

Dissolution

While it's never fun to think about the end - especially when things are just beginning - not having a plan for dissolution is a recipe for disaster. A business can close for any number of reasons, and not having a plan for dissolving the company can make for stressful situations with other members. Like other parts of your Operating Agreement, this section will detail member rights, roles, and responsibilities, but only in reference to what is to be done at the closing of the company. This section will detail who is responsible for what, how debts and assets are to be sold or distributed, and may even restrict members from opening a similar business for a certain amount of time.

Severability

This section details the protections of the agreement if any part of the agreement turns out to be in violation of a law in your state or federally. This ensures that the aspects of the agreement that are not in conflict with the law are still enforceable.

If you need help crafting an operating agreement, we are here to help! Schedule an appointment today with our business consultants to talk about your business and what you might need from an operating agreement, as well as any other questions you might have about your business.

Buying An LLC

A "Yes, We're Open" banner hangs in the foreground of a shop window with an out-of-focus couple in the background

If you're interested in owning a business but aren't interested in building one from scratch, you may want to know more about buying an existing business. There are many aspects involved in buying a company – including doing research into companies you're considering, calculating what you'd be willing to pay for the business, planning funding the purchase, creating written purchase agreements – but one of the first questions you may want to ask is, what should I know before I buy an LLC? Our business consulting services and Legal Protection Subscription Plans for Small Businesses will be able to help you with the process, giving you advice on the legal aspects of your purchase while our business consulting services help you plan how to run your new company. Read on for some basics on the idea of purchasing an LLC.

Research

Finding an LLC that you are interested in purchasing may take some research, including networking with family, friends, and others about what businesses might be for sale, as business owners don't always announce that they're looking for a buyer. Conferences and tradeshows can be another place to learn about opportunities to purchase existing businesses. Your local Chamber of Commerce is another avenue to find this information.

Explore Opportunities

Once you have identified businesses that are for sale or are open to the idea, it's time to learn everything you can about the business. Find out about any issues the business may be having, look over their books, contracts, and other documentation to help you make your decision. The business will also want to learn more about you, such as proof that you'll be able to financially make the purchase. Both parties will likely want a Non Disclosure Agreement in place.

Review

Once you have all the information, make sure to give it a thorough review, sifting through banking information, credits lines and loans, taxes, any other partnerships that may exist, employment records, sales records, and more. Knowing about the business' contracts and responsibilities beforehand will give you a better picture of how the business is run day-to-day than the bottom line profit-loss statements will.

Term Sheet

Once you have made your decision on which business to buy, official negotiations begin. Compose the terms of the purchase agreement in broad strokes - it will become more detailed later - that will help you with your purchase plan and commitments from the seller and from you. As time goes on and negotiations continue, this document will become more detailed. An added advantage is that everyone involved will have the same information.

Purchase Agreement

Finalizing the deal happens with all parties sign the purchase agreement, a legally binding document that details the purchase, including the price, the terms of the agreement, what all parties are agreeing to, and any other details that impact the business, the sale, or anyone involved in the business. the document is official once everyone signs it.

Business Ownership Information

Changing over the business ownership information ensures that the business officially reflects that you are the owner. Since state laws differ regarding notification of a change in ownership, you will need to check with your state government, the IRS, and any other entities or regulatory bodies to make sure that they have updated records of the change in ownership.

While you may not need a lawyer to buy an LLC, it can make the process less stressful and may make it faster. If you have any questions regarding your purchase, with our Legal Subscription Plans for Small Businesses are available 24/7 through our app to answer any questions you may have, give you advice, and review documents, contracts, and more, all for one low monthly fee. Once you've purchased your new business, our experienced small business attorneys can help you with dozens of aspects of your new business, including debt collection, contract and document review, employment concerns, and much more! Additionally, our Small Business Consultations can help you develop a plan to grow your new business, learn marketing techniques, and learn new skills. Sign up for our Legal Protection Subscription Plans for Small Businesses today or schedule a meeting with our business consultants!

10 Legal Items For Your Small Business Website

A screen of colorful HTML source code on a black background

Whether you've had a business web site for a while or you're just starting out, industry and regulatory compliance is often one area of business web sites that gets overlooked. Mistakes can be costly when it comes to complying with laws regarding what can - and cannot - be said or done on a business web site. Improving user-friendliness, visibility, and marketing reach are all important areas of building a business web site, but your site could be violating rules  and regulations regarding plagiarism, ownership, intellectual property, and privacy without you even knowing it. Our network of small business attorneys through our Legal Protection Plans for Small Businesses can help you with the details of your web site's regulatory requirements for your specific situation, industry, and locale, but here are a few general tips:

Domain Name

Most people register their domain names on term contracts that last from one year to a maximum of 10 years, but you can also purchase a domain name outright.  Make sure that you register or buy your domain name yourself. If this is done by another party, you are essentially letting another person control your domain name, and they can sell it or hold on to it if there is a dispute.

Site Hosting

The Internet is full of sites that let people build their own web sites, DIY-style, and these are usually hosted by the company where the site is built. There are also sites that sell you hosting separately from the coding and design aspects of your site. It is important to read through any agreements before you enter into them to make certain that you will own your design and content. Make sure that you can move your site to another hosting platform if you choose; nearly all the DIY sites own the design and you will have to start over if you decide to move your site.

Trademarks

It is possible to buy a domain name that infringes on someone else's trademark. For example, you may be able to buy the domain nike.com, but using that domain may infringe on copyrights and trademarks. This particular example is avoidable, but it is still important to do your due diligence and make sure that intellectual property laws aren't broken, even unintentionally. Conversely, if you think someone else is infringing on your trademarks or copyrights, you will want to speak to a trademark attorney right away.

Privacy & Security

One of the most important things that a small business web site needs to consider is how to handle customer data, privacy, and security. Ensuring that your site meets security standards, payment processing regulations, and safe handling of customer information is one of the first things you should do. Make sure that you have a system to handle customer data, and if your site uses cookies to deliver a customized user experience, make sure to have language drafted for your site that spells out your system, process, and protocols for your customers. Reach out to an attorney to get help with the kind of language that you'll need for your site to be legal.

Compliance with FTC Guidelines

In order to limit deceptive advertising that leads to fraud and scams, the FTC has regulations put in place regarding online advertising. You'll want to make sure that you understand these rules and never make false claims, even if you don't mean to do so. Saying something like, "Number One Rated in (BLANK) Industry" can get you fined if you don't have something to back it up, such as an actual award.

ADA Compliance

There have been lawsuits recently regarding the inaccessibility of web sites under the Americans with Disabilities Act (ADA). While small businesses with fewer than 15 employees aren't required to adhere with ADA guidelines, it makes business sense to do so from the start so that your products and services are available to everyone.

Plagiarism

You will want to make sure that your content is fresh and original for a number of reasons, including ranking high in search engines. There are plagiarism checkers available for you to use to make sure that your content is original and unique. Hiring a copywriter isn't a bad idea, but make sure that you will own the content that is produced for your web site. Make sure to cite sources for any external content you use, as well. Finally, taking your own photographs is best, or you can purchase the rights to stock photos from a stock photography site.

You will put a lot of work and effort into your business, including your customer or employee-facing web sites, so it is important to get it right the first time with competent legal advice from an experienced attorney. Our Legal Protection Plans for Small Businesses gives you access to just this kind of advice for one low, monthly fee. Learn more about our Small Business Legal Protection Plans or sign your business up today!