An operating agreement is a contract that governs the operations of a limited liability company (LLC). In North Dakota, there are three operating agreements: Articles of Organization, Operating Agreements, and Management Agreements. These documents govern the internal affairs of the LLC. They determine the ownership structure, set up management roles, and define the relationship among members. Each type of operating agreement serves a specific purpose.
Articles of Organization
This form establishes the organization of the LLC. It defines the entity’s name and lists each member’s names and address. It also describes the general nature of the business being conducted by the LLC. For example, it might state that the LLC engages in the business of selling real estate.
These agreements outline the responsibilities of managers and owners. A manager is someone who oversees the day-to-day operations of the business. Ownership interests are represented by one or more persons called Members.
A management agreement outlines the duties of directors and officers. Directors are people appointed to oversee the daily activities of the company. Officers include those who manage the finances of the company.
What Is a ND LLC Operating Agreement?
An Operating Agreement is a contract written between the owners of the limited liability company. Members usually own 50% interest in the LLC, but another option is also available. You can set up an operating agreement where one member owns less than 50%. In this case, the remaining partners are called passive members. Passive members do not participate in management decisions but can still receive profits and losses.
The Operating Agreement sets out how the LLC operates. For example, it outlines what happens when the LLC dissolves. If the LLC wants to dissolve, the members agree on how to do so. They decide upon the procedure, such as filing articles of dissolution with the secretary of state.
There are two ways to dissolve an LLC:
1. By mutual consent of members
2. By unanimous vote of the members
In some states, the owner(s) of the LLC can choose to dissolve the LLC without the approval of the other members. However, this is not always possible. In North Dakota, a majority of the members must approve the dissolution.
A North Dakota LLC Operating Agreement is different from a general partnership because it does not include a provision regarding the dissolution of the LLC. Instead, it provides guidelines for the operation of the LLC.
What is an ND LLC operating agreement?
An Operating Agreement protects your assets if something goes wrong with your business. If you are considering forming an LLC, it is essential to understand how an operating agreement works. This video explains why it is essential to have one.
To form an LLC in North Dakota, you must file Articles of Organization with the Secretary of State. You do not have to pay anything to incorporate. However, there is a filing fee for each person listed on the articles of organization. Once you incorporated, you formed a separate legal entity. Your assets become protected under the law.
The most common reason people form an LLC is they want protection from their creditors. Some states allow you to incorporate even if you have no intention of running a business. Other reasons might include protecting trade secrets for a start-up, purchasing real estate, creating a foundation, etc…
To learn more about why you should have an operating agreement, check out the following videos:
After Creating Your ND LLC Operating Agreement
Your North Dakota LLC Operating Agreement must include information about how you want to operate your business. You’ll need to decide what entity you’re creating, whether it’s a sole proprietorship, partnership, corporation, limited liability company, etc., and how many members you have. Once you’ve determined the type of entity you’d like to form, you’ll need to determine how much capitalization you wish to invest into the business. This includes deciding how much money you want to contribute personally, how much you want to contribute collectively, and how much you want to borrow. Finally, you’ll need to specify how each member will participate in the company’s management.
What is included in a North Dakota operating agreement?
An operating agreement is one of the most important agreements for every LLC owner. If you are starting a business, it is critical that you understand what is required in a North Dakota operating contract. There are several different types of operating agreements, each with specific requirements. This article provides information about the essential elements of an operating agreement.
The following list includes some of the key points File covered in a typical operating agreement:
• Ownership Interests – Each member of the LLC owns an equal percentage interest in the company. Members usually receive a proportionate number of shares based on their contribution to the capital. However, there are exceptions to this rule. For example, if a member contributes $1,000 while another contributes $10,000, the second member receives 10% of the company.
• Management Responsibilities – Each member agrees to perform certain duties and obligations, such as managing the company’s day-to-day operations. These include making decisions about hiring employees, paying bills, buying supplies, etc.
• Voting Rights – A member cannot vote unless he/she pays dues or makes a capital contribution. When a member does not pay his/her dues or make a capital contribution, he/she loses all voting rights.
• Dissolution – A member can dissolve the company by giving notice to the other members. Once dissolved, the company dissolves and no longer exists.
• Compensation – All members agree to be paid the same monthly amount. Usually, the monthly payment is calculated based on the company’s total value divided by the number of members.
Create your LLC Corporation with just 3 easy steps
File articles of organization for your business in North Dakota
Online filing is free if you don’t want to pay $135 to file by paper mail. But there is an additional step to file online. And you must provide the Secretary of state with a copy of your Federal Tax Return. For those reasons, it’s best to use the mail option.
The deadline to file articles of organization is Monday, April 15th. Suppose you plan to form a corporation, LLC, limited liability company, partnership, sole proprietorship, unincorporated association, nonprofit organization, or foreign entity. In that case, you’ll need to complete the following steps before midnight on April 15th.
1. File the necessary forms with the Secretary of State
2. Pay the required fees
3. Get a Certificate of Incorporation or Limited Liability Company
4. Obtain a Business License
5. Register Your DBA
Frequently Asked Questions
What does a registered agent do?
A registered agent is someone who represents you in court proceedings. A registered agent must be licensed to practice law in North Dakota. Your registered agent receives documents filed with the courts, serves papers on people involved in lawsuits against you, and keeps records of those actions. In addition, it is required that the person representing you keep up with changes to your business name, address, and phone number. If you fail to provide updated information about your business, your registered agent cannot represent you in court.
The registered agent must keep accurate records of all activities performed on your behalf, including:
• Receipt of legal notices;
• Service of process;
• Filing of pleadings;
• Mailing of letters;
Do I need an EIN for my North Dakota LLC?
If you are considering starting a small business, it might seem like there is no reason to bother with an operating agreement. After all, isn’t a sole proprietorship enough? Not necessarily. Operating agreements serve different purposes depending on whether you run a single-member LLC or a multi-member LLC. In addition, an operating agreement gives your LLC more legitimacy and protects your assets if something goes wrong. So what does an operating agreement look like? Let’s take a closer look.
James Rourke is a business and legal writer. He has written extensively on subjects such as contract law, company law, and intellectual property. His work has been featured in publications such as The Times, The Guardian, and Forbes. When he’s not writing, James enjoys spending time with his family and playing golf.