Avoid these common mistakes when drafting an operating agreement

On Behalf of | Feb 3, 2020 | Business Formation

During the business formation process, entrepreneurs must select a structure for their companies. As you may already know, there are many benefits to forming a limited liability company (LLC). Cincinnati business owners who choose this structure must also create an operating agreement. This document gives you the power to outline how your company makes functional and financial decisions. However, many entrepreneurs make several common mistakes when developing their operating agreements during the early stages of business formation. Examples of such mistakes include the following: Lack of clarity: It is tempting to gloss over sections of an operating agreement with the intent to go back later and make clarifications. Unfortunately, many people forget to shore up these agreements once their business formation tasks are complete. It is wiser for new entrepreneurs to have a clear yet detailed agreement right from the start. Skipped sections: Leaving sections of an operating agreement blank until the business is up and running is also unwise. Those who are not sure precisely what they need to include in this document should consider asking an experienced attorney for assistance. Entrepreneurs will appreciate the peace of mind that comes with knowing they have addressed everything an agreement requires. Potential loopholes: Those unfamiliar with legal language often unknowingly leave potential legal loopholes in their operating agreements that other entities could exploit. Having an attorney review or draft your agreement during your business formation efforts can help you avoid this problem. Protecting your Ohio business is never something you should neglect or put off until later. It is always better to make sure each document associated with your company is thorough, accurate and airtight against exploitation.