11 Nov 2012

Single Member Operating Agreements – Do you need one?

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Well, if you live in a place where it rarely rains, might you still need an umbrella? Maybe, maybe not. But getting wet is definitely not as severe a consequence as having your corporate veil pierced and your personal assets exposed.

This question comes up a lot with small business owners. They file the proper documents for a limited liability company. Then they get their Articles and never look back. While the odds are small that there will be any consequence of such lack of attention to detail, if the day comes that a claim is filed, the first thing you will be looking for is those papers to show you have no liability.

Even in Arizona where an operating agreement is not required, failing or neglecting to have one just leaves another opportunity for you to be cross-examined about whether you were really operating a legitimate company or really a checkbook with a limited liability name on it.

The more you look and act like a corporate structure, the more immune your personal assets will be. A simple single member operating agreement is another step in the process of protecting yourself. It should not be expensive, but like that umbrella, is nice to have if and when it rains.

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