When it comes to creating single-member operating agreements, some business owners are wary. After all, you are the only member. But could it be considered a type of insurance for your business? Take for instance if you live in a place where it rarely rains, such as Phoenix. Do you still own an umbrella? The likelihood is that you do. But getting wet is definitely not as severe a consequence as having your corporate veil pierced and your personal assets exposed.
“Do I Need a Single-member Operating Agreement?”
This question comes up a lot with small-business owners. As they launch their business, they file the proper documents for a limited liability company. Then they receive 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 you open to challenges. If a suit is filed against your company, you can be cross-examined about whether you were really operating a legitimate company.
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.
Have Questions? We Can Help!
At Poulos Law Firm, we put our depth of experience to work for you. Contact us to learn more about our services and find out if you need a single-member operating agreement.