The LLC Advantage: Train Track
An LLC (Limited Liability Company), like a powerful locomotive, iron-clad and spitting steam, launches full-speed ahead. Its iron sides protect you from its creditors. Its smooth controls allow you to choose the method of taxation best for you. You are at the helm; your partner is shoveling coals in the back. But you are still totally dependent on the track. One sharp turn and your juggernaut can derail.
Due to the enormous flexibility allowed by the structure of an LLC, prudent business owners must be extra cautious to cover all their bases. Several very important documents exist to enable business owners to control the operations of their business in the present and on to the future, to lay the track, so to speak.
The Operating Agreement is the rails of your LLC. This agreement contains all the essential terms governing the operations of your business, the relationship between you and your partners (the members of the LLC), the distribution of profits, and etc. All other agreements are incorporated into and referenced in your Operating Agreement.
The Buy-Sell Agreement is the railroad switch or turnout of your LLC. It governs the purchase and sale of interest in the company and provides specific mechanisms for the transfer of any interest upon the death, disability, divorce, bankruptcy, or etc. of a member of the LLC. Planning the turnouts ahead of time will keep interests in the company from being tied up in legal disputes and allow company operations to run smoothly.
There are many other agreements that should be executed to ensure the smooth operations of your LLC. These common agreements are the switch ties of your LLC:
1. The Confidentiality Agreement to prevent former members of the company from disclosing company secrets;
2. The Non-Compete Agreement to prevent former members of the company from working for the competition within a specified geographic distance of the company’s place of business; and
3. The Non-Solicitation Agreement to prevent former members from stealing away the customers or clients of the company.
Even the most solidly built train will go nowhere without a solid track. Plan for the future by timely executing the Operating, Buy-Sell, and other common agreements, and ensure that your LLC train doesn’t derail. If you need further help laying the track or have any questions concerning the formation of your business in Florida, please contact the Law Firm of Grigaltchik & Galustov, P.A. at (904) 738-8398.