LLC Operating Agreement Strength

[Matthew Karmazyn]

I just purchased an LLC from Inc Authority. The guy is now trying to get me to pay for an operating agreement. I was planning on just finding some basic one online sine I don’t plan to have anyone else on this LLC ever. He insisted an operating agreement online would not hold up and would not provide me the full legal protection of an LLC (quite generic). Somehow his operating agreement signed by a lawyer is stronger than one signed by myself and notarized, is this true? He is also trying to get me to pay extra for “membership certificates” saying I have no way to legally validate that I own this LLC without them which sounds like completely bogus since my name is registered to the LLC. I’m not sure how a certificate adds any validity or proof of ownership. Since I’m the only one ever planning on being in the LLC I se no need for membership certificates. Do I need this certificate to prove ownership of the LLC, and do they provide any protection for my personal assets? My only two goals for the LLC are to open a business bank account, and to protect my personal assets from any type of lawsuit that might occur.

[Chris K.]

@Matthew Karmazyn

For a single member LLC, you might be able to get by using an operating agreement that you find online. The problem is that you can also find some absurd ones online. I've run across a few during my days that were so bad it actually made me laugh out loud.

I would say don't waste money on "membership certificates" but that again depends on what the operating agreement says. Some operating agreements actually say that they need certificates to prove ownership (an example of a terrible one). 

Note that asset protection is more complicated than forming an LLC. In fact, the amount of asset protection you get from a single member LLC is way less than people think. It's helpful but it's a small part of your asset protection plan. That said, most people do not need any serious asset protection schemes.

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.