What Is an Operating Agreement?Īn operating agreement is not required in every state but is highly recommended. To learn more about LLCs, read this Step By Step article. Ownership percentages or units can also be specified in an operating agreement.Īn LLC is a business entity that offers liability protection for owners, as well as pass-through taxation, much like a sole proprietorship. Membership certificates are not required for LLCs, but they could be useful if you plan to raise money and issue ownership to investors.
This differs from a corporation, which distributes ownership via shareholder certificates.
The owners of a limited liability company (LLC) are called members, and an LLC membership certificate simply confirms the member’s ownership as either a percentage or in units.
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