Do you need an operating agreement to form a Louisiana LLC?

On Behalf of | Aug 9, 2022 | Blog, Business Law

Forming a limited liability company separates your personal assets from your business assets. An LLC structure is looser than a corporation, but you still must comply with Louisiana’s revised statutes for forming this entity.

The law requires you to file articles of organization and an initial report for your LLC and pay the filing fees. It does not mandate an operating agreement, but having one is still good business practice.

Why every LLC should draw up an operating agreement

Without an OA, the state’s general rules for LLCs govern the business’s structure, operations and internal disputes. A well-formatted OA clarifies oral agreements, procedures and business arrangements, reducing the potential for conflict.

Constructing an operating agreement can also strengthen your corporate veil. Though one of the primary reasons to form an LLC is to legally differentiate personal liability from business liability, this business structure may not be enough to protect your personal assets should the company run into legal or financial challenges.

What you should include in an operating agreement

Your operating agreement is an internal document. It is up to you to decide what specific information to include. However, most OAs contain the following:

  • Member ownership percentages
  • Duties and powers of members or managers
  • Voting responsibilities and rights
  • Profit and loss distribution
  • Transfer of interest and sale rules

The more specific the details, the stronger your OA.

Louisiana state laws might not require an operating agreement for your LLC, but having one provides a blueprint for your business and offers additional protections for you, other members and the company.