We have discussed the importance of all business organizations having governing documents, i.e. an operating agreement, partnership agreement, bylaws/ shareholder agreement, etc. One of the most common issues we run into is owners of single-member LLC’s failing to have an operating agreement.
Most assume “I own the business alone- why do I need something like that?”. One of the most important reasons you need this document is to show ownership. When you file your Articles of Organization with the State of Michigan, you are establishing the entity, providing the state with your registered office, a mailing address and a resident agent. Nothing on this document proves who owns the business. Many believe that the person who signs the bottom line is automatically deemed the “owner”, but this simply is not the case.
Your operating agreement is what shows true ownership of your business. And since Michigan does not require you to file the document, this often falls through the cracks. Here’s when it comes up for most business owners: when you want to lease property or equipment, apply for certain business certifications, apply for a loan or business grant, handle certain banking transactions, investor opportunities and many other scenarios. People want to see your ownership and operating structure- even if it is just you. Often, owners of solely-owned businesses get word that they need to produce an operating agreement and call us completely frenzied. They want to sign a lease and are on a tight deadline, but someone asked to see the document- and of course they don’t have it!
The moral of the story is EVERY business organization needs a governing document- we are all in the same boat! Whether you solely own your LLC or corporation or you have partnered with others, which further increases the need, make sure you get everything in order today!
If you are thinking about setting up your business- or even if you already have- call C&G TODAY to assist you!
P: 248-395-3699 E: firstname.lastname@example.org
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