Drafting an Effective Operating Agreement - IL, AZ, MI

April 19, 2016 - Categories: Legal Articles, Michigan, Illinois, Arizona


If you are starting a new business venture and you have a partner, it is essential that you have a written agreement between you regarding how the business will be run. Even if your business partner is a family member or close friend, you need a contract to govern your relationship. Things change and as your business grows, disputes can occur. Having an agreement in place will not only help resolve disputes, but it will also help preserve your relationship.

The following are a few preventative steps you can take to help ensure disputes between partners do not hurt your new company:

  • Signed Operating Agreement. It is common for partners to work together for a “trial period” without a written contract between them, but the quicker you sign a binding document the better. Neither partner should make significant sacrifices (time, money, etc.) until they have signed an Operating Agreement.
  • Retain an attorney. Don’t make the mistake of thinking you can use DIY documents from the Internet to draft the company’s governing documents. The binding contracts you put into place at the start of your business will have long-lasting consequences. If you want your new venture to be your career, it is worth the small investment to work with an attorney to ensure your entity is properly set-up and your best interests are protected.
  • Anticipate problems. One of the most important things to include in the Operating Agreement is how to deal with worst-case scenarios. In other words, try to predict what obstacles could occur in the future and outline the methods for how to deal with them. What will happen if a partner dies? Can a partner sell his or her share of the business to anyone? Dealing with the tough questions while everyone is getting along can save you from litigation in the future.
  • Gut check. If your partner is difficult to work with during the negotiations of the Operating Agreement or you discover you have very different views of how to run the business, you should strongly consider whether you want to proceed with going into business with this person. Don’t be afraid to walk away because it will much easier to do now than years down the road.


Access Legal Care provides a free legal consultation and affordable legal help for people who want to create, revise, or terminate an operating agreement, or for general advice.

If you would like us to help you with legal advice or drafting an operating agreement in Illinois, Arizona, and Michigan, please schedule a free phone appointment with an attorney at https://www.accesslegalcare.com/schedule-a-phone-appointment/

We hope to be able to help you!