An operating agreement is important for several reasons:
Defines Ownership: It clearly outlines the ownership percentages of each member. Management Structure: Specifies how the business will be managed, either by members or managers. Reduces Conflicts: Provides a framework for resolving disputes among members. Protects Limited Liability Status: Helps maintain the LLC's limited liability status by showing that the business is a separate entity. Financial and Taxation Guidelines: Specifies profit distribution, contributions, and tax treatments.