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19. Should I Create an Operating Agreement If I Choose the LLC or PLLC Format?

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Operating Agreements are important, particularly if you plan to have multiple members in the LLC. Using an operating agreement can help to avoid management and ownership misunderstandings that may occur during the business relationship. A carefully drafted operating agreement will establish specific rules and procedures in connection with the operations of the LLC, such as the percentages of ownership, the share and distribution of profits and losses, the rights and responsibilities of each member, how the LLC will be managed, and ownership transitions (such as what happens when a member leaves, dies, retires, becomes disabled, or wishes to sell his or her interest in the LLC, or when the LLC wants to add new members).

A Dentist’s Guide to the Law

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