Is an Operating Agreement Necessary for a Colorado LLC?
Significance A Colorado LLC’s operating agreement should help the company avoid financial misunderstandings, and it will define the company’s management structure. The state of Colorado does not set specific guidelines for what must be in a Colorado LLC’s operating agreement. This allows a Colorado LLC to tailor the company’s operating agreement to the needs of the business. Furthermore, by writing an operating agreement, a Colorado LLC keeps from being subject to the default rules of the state. Warning All single-member LLCs in Colorado must have a written operating agreement. A single-member LLC in Colorado that does not have an operating agreement will look very similar to a sole proprietorship. An operating agreement preserves the single-member LLC’s limited liability status. Without an operating agreement, the single member of the company may be personally liable for company losses, debts and obligations. This means the member may lose his home, car and other personal assets due t
