The Riviere Advocacy Group will walk you through the foundation of your corporate formation and the single most important document that you will walk away with is your operating agreement. Call and speak to a Business/Commercial Lawyer today! When forming an operating agreement much like anything else, building on a solid foundation will keep your business strong. Basically, it builds incredible value into your business if you have the proper governing documents. On the other hand, without an operating agreement, you are basically operating on vapor should a conflict breakout. Initial key considerations that one should map out are interests in the company. Will it be 50/50, 25/25/50 or some other percentage of stake? Minority and majority parties usually have differing concerns than two 50/50 members.
It is necessary to focus on some key points while doing a corporate formation. Firstly, who are the businesses investors. Secondly, will they be passive or managerial? Thirdly, are any of the members of the LLC key employees? Other key points that need to be covered are:
- Organizational Matters
- Members and Meetings
- Restrictive Provisions
- Management
- Capital Contributions
- Capital Accounts
- Allocations and Distributions
- Taxes, Books and Records
- Dissolution and Winding Up
- Transfers of Interests
Physicians forming a group practice in most cases will have an operating agreement or a Shareholders’ Agreement. These governing documents usually include points which are especially important to healthcare professionals, doctors, dentist and psychiatrists such as:
- Compensation (How will net profits be divided?).
- How will expenses be paid (ie CMEs, licensing fees, health insurance, disability insurance).
- Termination (By majority vote, without cause, triggering events).
- Notice Required for Voluntary Withdraw.
- Buy-outs (death, retirement, disability, withdraw).
- Protection against mass exodus key doctors.
- Malpractice Tail Coverage. (Paid by practice upon triggering event or withdraw?)
- Restrictive Covenants (Time and geographical restrictions).
- Buy-in. (Considering growth who will be allowed to buy-in? For ow much?)
A well-defined LLC Operating Agreement can help your business run smoothly. Most of the states require you to have an LLC operating agreement. However, if your state does not legally require it, it’s always a good idea to make a written agreement that defines business operations. Moreover, it builds confidence among all the parties in the agreement.
The guidelines of the agreement varies by state. Therefore, a lawyer who is well aware of all the guidelines, can help you create an agreement easily as per law.
We have helped many clients in this practice area. Similarly, we can help you draft an operating or shareholder agreements. Contact our business lawyer today and discuss all your queries related to operating agreement.