Vital Step 2 to Protect Your Business in Uncertain Times
This is a stressful, scary time for everyone, and particularly business owners. Now is the perfect time to secure your business assets, protect both business and personal assets, and prepare your business for the future, whatever that might hold!
Four steps are vital to obtaining this level of security. Last week, I explained why forming an entity is Step 1. The second step is below. Watch your email for the next 2 Tuesdays for the rest.
Step 2: Execute an Operating Agreement
Unless you are the only owner of the business (for an LLC, the sold Member), the only way to fully protect your new entity is by having all owners enter into an Operating Agreement (also called a Company Agreement). An Operating Agreement is a legally binding roadmap of how the business will be run that can protect you from future surprises.
An Operating Agreement:
- Ensures that all business owners are on the same page regarding rights and responsibilities
- Ensures that the business will always be owned and managed the way the owners envision
- Helps prevent surprise problems from arising
- Provides for addressing certain problems should they arise
- Will likely save your business money in the long run
- Definitely reduces stress on the owners
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