A Limited Liability Company (LLC) is a separate legal entity that can conduct business just like a corporation with many of the advantages of a partnership. It is taxed as a partnership. Its owners are called members and receive income from the LLC just as a partner would. There is no tax on the LLC entity itself. The members are not personally liable for the debts and obligations of the entity like partners would be. Basically, an LLC combines the tax advantages of a partnership with the limited liability feature of a corporation.
Management of an LLC is vested in its members. An operating agreement is executed by the members and operates much the same way a partnership agreement operates. Members may delegate authority to managers who run the LLC much the same way officers of a corporation would run a corporation. Profits and losses are shared according to the terms of the operating agreement.
A South Carolina Member Managed Limited Liability Company Operating Agreement is a legal document that outlines the rights, responsibilities, and operations of a member-managed limited liability company (LLC) based in South Carolina. This agreement establishes the framework for how the LLC will be governed and managed, including the relationships between the members and managers, decision-making processes, distribution of profits and losses, and other important aspects of the company's operations. In South Carolina, there is a standard Member Managed Limited Liability Company Operating Agreement that can be used as a template or starting point for creating a custom agreement that suits the specific needs of the LLC. However, it is important to note that this agreement can be modified and tailored to reflect the unique requirements and preferences of the LLC members. Key components typically included in a South Carolina Member Managed Limited Liability Company Operating Agreement are: 1. Introduction: The agreement begins with an introduction that states the names and addresses of the LLC members and provides a brief overview of the company's purpose and activities. 2. Initial Capital Contributions: This section outlines the initial contributions made by each member, which could be in the form of cash, property, services, or other assets. 3. Management and Decision-Making: The agreement defines the management structure of the LLC, clarifying whether it will be member-managed or manager-managed. In a member-managed LLC, all members have the authority to make decisions, while a manager-managed LLC designates specific individuals as managers responsible for decision-making. 4. Voting Rights: This section outlines the voting rights of the LLC members, specifying the percentage of votes required to make important decisions, such as amending the operating agreement, admitting new members, or selling company assets. 5. Profit and Loss Distribution: The agreement details how the LLC's profits and losses will be allocated among the members, often following their distribution percentages, which can be determined based on capital contributions, ownership percentages, or any other agreed-upon method. 6. Meeting and Communication: This section establishes the frequency and format of members' meetings, as well as requirements for providing notice and documenting minutes. It may also cover communication methods, such as email or written documents, for decision-making purposes. 7. Transfer of Ownership Interests: The agreement outlines the procedures and restrictions involved in transferring ownership interests or membership shares within the LLC, including any right of first refusal or approval rights. 8. Dissolution and Termination: This section addresses the circumstances under which the LLC may be dissolved, such as by unanimous agreement or in case of bankruptcy, and includes procedures for winding up the company's affairs. It is crucial for South Carolina member-managed LCS to have a well-drafted Operating Agreement in place to ensure clear and consistent governance. As LCS vary in nature and goals, it is advisable to consult with legal professionals experienced in South Carolina business law to customize an Operating Agreement that meets the specific needs of the LLC and its members.
