If you are staring a new business in Utah, it’s important to have appropriate governing terms which are found in an operating and/or partnership agreement, or for a corporation, by-laws. These documents will create the foundation of your business, and must be reviewed by a legal professional to ensure that they adhere to Utah business requirements. The decisions you make now will impact the long-term success of your business. Willow Creek Law will guide you through the business start-up phase with the correct operating and partnership agreements.
LLC Operating Agreements
Operating agreements are important organizational documents, sort of like a constitution for your business. They govern how the business is run and include information about the day-to-day operations. Limited Liability Companies formed in Utah are not required by law to have an operating agreement, but we recommend that all LLCs have one. The operating agreement provides a framework for the organization, and usually includes the following:
- Percentage of ownership by different parties
- Rights and responsibilities of members
- Voting powers of members
- Allocation of profit and losses
- Management details
- Fiduciary duties of management and staff members
While operating agreements are not required to be filed with the Utah Division of Corporations & Commercial Code, they are typically required by lenders and banks to meet financing requirements, or to open new accounts.
Corporations are governed by by-laws. They normally contain the following:
- Corporate structure
- Responsibilities and duties of corporation members
- Board of directors information
- Time and place of shareholders or director meetings
- Committee listings
A partnership agreement is a written agreement between two or more people who join into a partnership to conduct business for profit. It typically contains information related to the nature of the business, the capital contributed by each partner, and the rights and responsibilities of each partner. If you enter into a partnership with another person, it is important to have an attorney review your information to ensure that your partnership is fair, clearly written, and protects your interests.
General partnerships expose the partners to liability for the debts of the company. If one of the partners chooses to withdraw from the partnership, they will remain liable for incurred debts and future debts. Limited partnerships and limited liability partnerships (LLPs) offer some liability protection, and are often a better option.
For more information about partnerships and operating agreement requirements in Utah, contact Willow Creek Law today at: (801) 233-0606.