You may consider your LLC operating agreement to be a prenuptial agreement for the business. It provides members with a comprehensive framework for dealing with business-related functional issues and can minimize conflicts in the future. As mentioned earlier, you don`t need to consult legal counsel to enter into an operating agreement, but many still choose to do so for security reasons. Another potentially important impact of the New LLC Act concerns distributions. The standard rule of the New LLC Act states that distributions (with the exception of final distributions) must be made equally to all members. A.R.S. § 29-3404.A. For example, once the new legislation comes into effect,[2] if you hold a 75% interest in a two-member LLC, but the company does not have an operating agreement or the operating agreement is not informed of how distributions are to be allocated, you are only entitled to a 50% share of the distributions despite your majority ownership. In such a scenario, you will still be affected and taxed 75% of the LLC`s income, even though you will only receive 50% of the distribution. If you are concerned about the above, check your operating agreement.

If the terms of this Agreement do not conform to what Members believe to be fair, amend them. Every owner of Arizona LLC should have an operating agreement in place to protect their business operations. While not required by law, an operating agreement establishes clear rules and expectations for your LLC while establishing your credibility as a legal entity. While it`s a good idea to create a working agreement before submitting your organizational items, the state doesn`t stop LLCs from waiting for the incorporation process to complete. It should be noted that some banks require you to file an operating agreement to open a business bank account. It is recommended by the state. Under Article 29-682 of the Arizona Constitution, any Arizona LLC may enter into an operating agreement to govern the company`s operating procedures. Whether you form an LLC with one or more members, your operating agreement should cover all of the following topics. Some of these provisions will not have much impact on the actual operation of a one-person LLC, but remain important for reasons of legal formality.

This is a significant change in Arizona law. A person who has a fiduciary duty must generally put the interests of those to whom the obligation is owed ahead of his or her personal interest when dealing with matters that fall within the scope of the relationship. A fiduciary duty also includes a duty of loyalty. For individuals who are members of more than one multi-member LLC operating in the same industry, the existence of an obligation requiring you to place the interests of the LLC and members above your own should cause you to promptly assess the risks associated with such liabilities and require you to: Take steps to minimize the possibility of future litigation arising out of those interests. Again, you can eliminate or limit such an obligation, but it must be set out in the LLC`s operating agreement. Arizona LLC`s articles of association forms allow members of the company to establish their articles, rules, and ownership shares, as well as many other powers. The form is primarily used to enter into an agreement with other business owners to protect themselves individually, and it can be used for individual owners to help be claimed as a unit. Regardless of the type of Arizona LLC you form, you need to create an operating agreement.

Here`s the reason: Step 9 – Consequences of the Member`s Death, Dissolution, Retirement or Bankruptcy – It is important that members of a company review very carefully and consider the nature of this section of the agreement in case members would like to consider a change: Working with an experienced business lawyer to create a company agreement, you will save yourself a lot of stress and additional problems in the future and protect your Business. Your company agreement should cover all the issues that you and other members wish to address. Here are some examples: Arizona LLC`s multi-member operating agreement allows an LLC with more than one (1) owner to enter into a contract with the others regarding duties, rules, and interest percentage. The form acts as a partnership agreement that identifies the capital offered by a member and what obligations each person […] In Arizona, an operating agreement may contain any legally sound provision that relates to the operation of the LLC and involves its employees or members. While Arizona law doesn`t require you to create an operating agreement in writing (unlike other states), it`s still important to make one, as it can be difficult to prove unwritten terms and conditions. You can use the company agreement to determine how profits should be shared among group members. For example, if one of your members contributes more financially, you can include in the operating agreement that they will receive a larger portion of the company`s profits. Arizona law does not require your operating agreement to be notarized to make it enforceable and valid.

However, some people still choose to do so. Keep in mind that these company agreements are for reference and should be reviewed by a lawyer. After each major business event, such as the addition or loss of a member, it`s a good idea to review the operating agreement and consider an update. Depending on how your operating agreement is drafted, it may be necessary for some or all members to approve an amendment to the document. In this guide, we provide you with free tools and templates to help you sign your Arizona LLC operating contract. We have created a tool that is always free and reviewed by a lawyer that allows you to create a custom operating agreement for each type of LLC you have, with the following features: The above offers only a small selection of changes to the standard terms that apply to LLCs under the New LLC Act. So, if you are a member of a multi-member LLC and do not currently have an operating agreement, it is recommended that you create one or make sure that all members agree with the new standard rules. For LLC members who have an operating agreement, it is recommended to review it against the New LLC Act to determine if they are silent on any of the standard rules and, if so, to discuss with other members whether the standard rules are acceptable or if you need to change the operating agreement. .