A Pennsylvania limited liability company (LLC) is a popular business structure among entrepreneurs due to its flexibility and protection of personal assets. To properly establish an LLC, it is recommended to have an operating agreement that outlines the company`s management, ownership, and operating procedures. In this article, we will provide an example of a Pennsylvania LLC operating agreement.
1. Introduction
The introduction section of the operating agreement typically includes the name of the LLC, the date of formation, and the purpose of the business. For example:
This Limited Liability Company Operating Agreement («Agreement») is made and entered into on [DATE] by and among the members listed in Schedule A attached hereto (collectively referred to as the «Members»), for the purpose of forming a limited liability company under the laws of the Commonwealth of Pennsylvania.
2. Management
The management section of the operating agreement clarifies who will be responsible for managing the LLC`s daily operations. LLCs can be member-managed or manager-managed. Member-managed LLCs are managed by the members themselves, while manager-managed LLCs are managed by one or more managers appointed by the members. For example:
This LLC shall be [member/manager]-managed. The [member(s)/manager(s)] shall have the authority and responsibility to manage the day-to-day affairs of the LLC.
3. Ownership
The ownership section of the operating agreement outlines the ownership structure of the LLC. It includes the names of the members and their respective ownership percentages. For example:
The Members and their respective ownership interests in the LLC are as follows:
Name Ownership Percentage
———————————-
[Name 1] [Percentage]
[Name 2] [Percentage]
[Name 3] [Percentage]
4. Voting
The voting section of the operating agreement describes how decisions will be made within the LLC. This includes the number of votes needed to approve certain actions, such as admitting new members or making changes to the operating agreement. For example:
Unless otherwise specified in this Agreement, all decisions shall require the approval of [51%/67%/100%] of the Members, based on their respective ownership percentages.
5. Distributions
The distributions section of the operating agreement indicates how profits and losses will be distributed among the members. For example:
Profits and losses of the LLC shall be allocated to the Members in proportion to their respective ownership percentages. Distributions of profits shall be made to the Members in accordance with their respective ownership percentages.
6. Dissolution
The dissolution section of the operating agreement outlines the procedures for dissolving the LLC. This includes the vote required to dissolve the LLC, the distribution of assets, and the payment of liabilities. For example:
The LLC may be dissolved by a vote of [51%/67%/100%] of the Members. Upon dissolution, the LLC`s assets shall be distributed to the Members in accordance with their respective ownership percentages. All liabilities of the LLC shall be paid before any distribution is made to the Members.
Conclusion
In summary, a Pennsylvania LLC operating agreement is a vital document that outlines the management, ownership, and operating procedures of the business. The above example provides a framework that can be customized to fit the specific needs of the LLC. It is always recommended to consult with a qualified attorney to ensure that the operating agreement complies with the laws of Pennsylvania and adequately protects the interests of the members.
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