Set your business up to expand at the start!
The Operating Agreement or Shareholder Agreement are much the same document. Each sets up the respective rights, obligations, rules, and other guidelines for a business. Although not required in Illinois, an operating agreement is a great way to establish confidence in a potential investor or financer that your business is a serious and legitimate operation.
Some of the basic items these agreements will outline are:
1. How profits are calculated between the ownership;
2. What happens if spousal ownership ends with divorce;
3. What happens if an owner dies;
4. How disagreements are resolved;
5. How to add more investors; and,
6. How the business can be sold.
You may not want to end up in business with your late partner's spouse. You may want to make sure your children own, but don't necessarily operate, the business after you pass. You may need a larger loan and the bank requires a copy of your operating agreement. We can help you answer these and many other questions you may have regarding a need for an operating or shareholder's agreement.