Establishing an operating agreement should be a priority for anyone looking to form a limited liability company (LLC) or other business in New Jersey. Aside from setting out important operational guidelines in clear terms, a comprehensive operating agreement can be crucial when it comes to resolving future legal issues and disputes that might otherwise sidetrack your business.

Working with a New Jersey operating agreements lawyer may be beneficial in helping ensure your agreement covers everything it should and meets the unique needs that your business and co-founders might have. A knowledgeable business formation attorney could clarify the ways that state law governs these agreements and walk you through each step of drafting a thorough and legally enforceable one.

Basic Elements of a Comprehensive Operating Agreement

An operating agreement establishes a company’s ownership structure and the operational rules the company will follow when doing business. New Jersey Revised Statutes §42:2C-11 establishes four matters related to business operations that a valid agreement might govern:

  • Relations between members and the LLC and between two or more individual members in the context of the business
  • Obligations and rights for any member acting as manager of the LLC
  • Activities the company performs and how those activities will generally be conducted
  • Conditions and procedures for making enforceable changes to the agreement

These agreements cannot change an LLC’s standing to sue or be sued, nor can it eliminate duties of fiduciary responsibility or loyalty applicable to any LLC members. It also cannot alter obligations of contractual good faith or restrict the rights of any person other than an LLC manager or member. An attorney in New Jersey could further explain the limitations and goals of an operating agreement applicable to a prospective business owner’s circumstances.

Why are Operating Agreements for New Jersey Businesses Important?

State law does not require LLC founders to draft operating agreements before or after submitting the documentation to establish their business in the eyes of the state. New Jersey Revised Statutes §42-2C-12 only affirms that two or more parties have the option to form an operating agreement that, upon formation, the LLC may subsequently enforce and be bound by the terms of.

There are a variety of reasons why working with a skilled attorney to put an operating agreement in writing is a good idea for anyone seeking to form an LLC in New Jersey. For sole owners, operating agreements can prove legal reinforcement of limited liability status in the event an issue arises that requires litigation in court. For multi-member LLCs, clear and concise business operating agreements can help minimize misunderstandings and disputes before they have a chance to interfere with business procedures.

Negotiating Management Contracts in the Hospitality Industry

As hotels, restaurants, and other hospitality businesses expand to cover more territories beyond their original location, entering into management agreements with third-party companies may become necessary to ensure smooth and consistent operations across multiple franchises or locations. Depending on the circumstances, a management contract could establish how a hospitality business will be operated under the managing company’s brand or simply how a smaller management entity will handle daily operations on behalf of a business owner.

Management contracts often extend for decades and, and while the original owner maintains ownership over business assets and real estate, they also assume most of the risks that may come from subpar operations. Because of that, it can be especially crucial to work with a New Jersey operating agreements attorney when negotiating this kind of agreement.

Reach Out to a New Jersey Operating Agreements Attorney for Assistance

Although you are under no legal obligation to write up an operating agreement for your LLC, not doing so could end up being a critical mistake. Putting down crucial elements of your operating plan in written form could help create a sustainable business both during normal operations and when unexpected problems crop up.

Working with a New Jersey operating agreements lawyer could help to verify your agreement is as comprehensive and airtight as possible. Call the firm today to learn more and to get started.