A Nebraska Operating Agreement contains crucial details about how your company will be run and by whom. Your Operating Agreement should be a key formation document that lists expectations for your business goals, the leaders you will employ (including yourself), and the members who will contribute to your company. This document should function as the procedural template on which your business is run and projected to grow.
Whether you are planning to launch a multi-member or single-member enterprise, a Nebraska LLC Operating Agreement spells out the legal liabilities of your business, protects your business interests, and offers interior stability. This guide will explain the steps for drafting your Nebraska Operating Agreement and provide details to include in this powerful document.
What is a Nebraska LLC Operating Agreement?
Most of the paperwork required during the LLC formation process, including your Certificate of Organization, can be completed online through the eDelivery platform offered by the Nebraska Secretary of State. Your company’s Certificate of Organization represents the formal registry of your new venture with the state government. The filing of this document comes with a filing fee of $100.
It is important to know that you won’t be required to file your Nebraska LLC Operating Agreement with your Certificate of Organization. According to revised statutes under the Nebraska Uniform Limited Liability Company Act, your Operating Agreement can be “oral, in a record, implied, or in any combination thereof.” In other words, think of your Operating Agreement as an internal document you owe yourself and your business, even if you do not owe that step to the state government.
The reason that a Nebraska Operating Agreement is so important is that it essentially houses the rules by which your company will run. This document will identify the responsibilities of every owner (called “members” in an LLC) and their percentages of ownership. It will delve into how the company will handle voting issues, membership obligations, financial maneuvers, and even dissolution under various circumstances.
Why do I need an LLC Operating Agreement in Nebraska?
One could be forgiven for wondering why a Nebraska LLC Operating Agreement is necessary if the state government does not include it in its LLC filing requirements. A good place to get an idea of this document’s importance is via the U.S. Small Business Administration (SBA). The SBA lists the Operating Agreement as a “key document” in the creation of an LLC.
There are two major ways that your Nebraska Operating Agreement will function on behalf of your new business. The first is in the capacity of a guidebook to be used for reference in all matters concerning the internal workings of your business. The second is in the manner of a binding legal contract, proving that all owners and members have agreed to abide by the rules outlined in that guidebook.
Having all LLC members give their signature to the Operating Agreement obligates them to honor it as enforceable company law. The Operating Agreement protects your business from mismanagement or leadership not in line with your company’s values. Much like a government statute or law, your Nebraska LLC Operating Agreement provides the answer to common problems or everyday functions pertaining to your business.
There are also quite a few pragmatic benefits to your Nebraska Operating Agreement. These include:
- Additional protection from personal liability: Many prospective business owners choose the LLC format over other business structures because of the protection from personal liability. Because it is drafted by you, the founder of your business, the Nebraska LLC Operating Agreement lends further and more specific separations between you and your company. Legal worries can strike any business for a variety of reasons. Making sure that you have a thoughtful Operating Agreement diminishes the possibility of your personal assets being damaged by such an occurrence.
- Business credibility: Your LLC’s public presence represents a facet of your business that you will need to pay attention to. How the business community sees you can have drastic effects on your company’s success. A Nebraska Operating Agreement ensures a reputational advantage for your new company. Third-party entities and financial institutions view an Operating Agreement as an assurance of substance. This document helps your business promote an image of solid planning and stability. This would be beneficial to have, for instance, when you’re trying to open a business bank account.
- Formalized verbal agreements: For the most part, for your wishes and concerns for your company to be valid and upheld in a court of law, you need a written Nebraska LLC Operating Agreement. Once all of your members have signed this document, it is legally binding. Should there be a disagreement between members later, a financial issue, or any other company tension, your Operating Agreement will hold up in court as the guide on these matters.
- Maximize LLC flexibility: LLCs are extremely flexible compared to other business structures. They do not labor under the strict tax law and reporting regulations of corporations, for example. Your Nebraska LLC Operating Agreement is where you can expand that flexibility to the maximum and get the most out of this particular business structure. For instance, you can write in your Operating Agreement specific details about how buyout opportunities will be handled. You can compose administrative duties and member obligations that will evolve as the company grows. You can even dictate fiscal rules that you believe will best support your company’s expansion.
- Protection from state interference: You likely have ideas about items like when and how percentages of your company can be sold. One of the most important things that a well-written Nebraska LLC Operating Agreement does for your business is to turn your ideas into “law.” If you fail to write an Operating Agreement, state law will fill in the blanks for you. Ultimately, without a Nebraska Operating Agreement written to your specifications, your company will be at the mercy of whatever default state law governs any problem your business confronts. If protecting your original vision and goals for the company is of central value, spend time drafting an Operating Agreement that will serve your unique enterprise.
What do I include in my Nebraska LLC Operating Agreement?
Of the many valuable features associated with a Nebraska LLC Operating Agreement, its individuality may be most useful. While it is always helpful to research the Operating Agreements of companies that inspire you or whose practices you would like to emulate in your own business, your Nebraska Operating Agreement should be your own.
With that in mind, the following items represent basic guidelines offered by the SBA about what should appear in the most thorough Nebraska Operating Agreements:
- LLC Name
- Management Structure
- Member Duties and Responsibilities
- Voting Rights
- Meeting Guidelines
- Buyout and Buy-Sell Rules
- Succession Planning
- Single-Member LLC Statute
- Severability Provision
1. LLC Name
It may seem a little too obvious that your Nebraska LLC Operating Agreement should contain your company name. However, some business founders do not realize that this business name must exactly match the one that appears in your Certificate of Organization.If you are drafting your Operating Agreement at the same time during which you are gathering your other documentation needed for registration, do not forget to review Nebraska’s official LLC naming guidelines.
Including a section in your Nebraska Operating Agreement dedicated to listing owners is a vital step. Every person who has a legitimate ownership stake in your Nebraska LLC needs to be prepared to have their full name appear in your Operating Agreement along with their capital contributions.
Along with names, include percentages of ownership for each member. Many times, that percentage will be determined by a given member’s capital investment in the company. As capital investment refers to the money a business requires to launch, each owner may have a different percentage.
Of course, it is also possible to decide that membership interest is distributed evenly if that is agreeable to all founding parties. You can also use some other agreed-upon metric to determine ownership percentages. These are the decisions it would be wise to discuss with members ahead of drafting your Nebraska LLC Operating Agreement.
The distributions section of your Nebraska Operating Agreement will specify how profits are split among your company’s members. Again, you can decide to split things evenly, or you can determine the split based on the proportion of ownership or some other means.
This portion of your Nebraska LLC Operating Agreement should also specify when profit distribution will take place for your company. Choices could range from once at the start of every fiscal year to four times a year at the conclusion of every quarter.
4. Managerial Structure
When it comes to management of the company, determining whether your Nebraska LLC will be member-managed or manager-managed is another detail that should be included in your Operating Agreement. Member-managed LLCs are those that have management governance from the listed owners of the business. Duties can be divided according to ownership percentage or specified by you to suit your collective goals.
Manager-managed LLCs represent a format in which governance of the company is handled by outside appointees or a group of designated internal members. With this structure, passive investors can become a part of your company’s ownership makeup. These investors play only a financial role in your business and do not necessarily take part in daily operational functions.
5. Member Duties and Responsibilities
If you choose a manager-managed LLC format, your Nebraska Operating Agreement needs to cover every aspect of what you expect those managers to do. Precise details about duties and responsibilities concerning everything from simple tasks to managerial voting rights can help prevent problems later.
Do not forget that the obligation of your other members should be outlined just as explicitly. Although members may not play a daily role in business operations, your Nebraska LLC Operating Agreement needs to offer expectations for their engagement.
For example, their attendance at meetings may influence company choices and directions. Remember that all managers and members must sign the Operating Agreement at the time of its completion to become legally binding.
6. Voting Rights
Feasible and fair voting rights should also be apportioned to members in the wording of your Nebraska LLC Operating Agreement. Consider details such as whether you will offer equal voting power to all members or distribute voting rights in accordance with ownership percentage or by some other determination.
Think about whether you want votes to be unanimous or representative of a majority to win. Carefully review the power you delegate with these voting rights, as it can play a significant role in altering the course of your future business. For instance, let’s say you have a company owner who only plans to invest money and not time into your endeavors. Your Nebraska LLC Operating Agreement should address whether all members have an equal say in the direction of the company and why or why not.
7. Meeting Guidelines
The drafting of your Nebraska LLC Operating Agreement will require the inclusion of guidelines pertaining to meetings. Meetings with members represent the most convenient and consistent way to make basic decisions, such as annual reviews or voting procedures.
Although meetings are not a necessity as they are with corporations, your Operating Agreement can make meetings a mandatory aspect of your company’s established rules. For manager-managed LLCs, making meetings obligatory can encourage those members who may not be a part of daily operations to remain engaged and active within the company.
8. Buyout and Buy-Sell Rules
Establishing expectations about how your company may be bought or sold is a point of interest your Nebraska LLC Operating Agreement can help solidify. Create clear guidelines on how new members can come in and what leaving members must do to exit. Examples might include specifying that a new member can only come in by a unanimous vote from the current owners or that a set amount of capital donation is required.
Be highly specific in your Nebraska Operating Agreement regarding what should happen to a leaving member’s percentage of ownership. Do incoming members need to buy in at the same percentage, or is there room for individual consideration? Weighing these kinds of decisions carefully as you draft your Operating Agreement can better safeguard your company’s long-term growth.
9. Succession Planning
Your Nebraska LLC Operating Agreement needs to carefully address the harsh realities that can impact your business, such as the need for succession. What happens to your company if you cannot lead? What occurs to its leadership after the founders pass away?
Although these can be difficult subjects to think about and plan for, addressing them in your Operating Agreement can mean that your business lives on the way you designed it. Likewise, include options for when natural retirement can take place.
Can established members forward their portion of ownership to family or designated loved ones? Does the ownership percentage owned by a deceased party revert back to the other original owners? Answers to these questions and more should be found in your Nebraska LLC Operating Agreement.
What to do upon the company’s dissolution represents another contingency that may not occur to you to include in your Nebraska LLC Operating Agreement. Companies come and go for all reasons in the ever-evolving business world.
You may want to write different rules for dissolution relating to the different ways your business could cease to be. For example, if your Nebraska LLC breaks up due to founding members amicably wanting to move to their own projects, you might include details for how final taxes and returns should be dispensed.
If your company goes out of business due to external factors, such as bankruptcy, it would be wise to include specific steps for meeting existing obligations, which may be outstanding at that time.
A Nebraska LLC Operating Agreement is not carved in stone. A well-written Operating Agreement includes a plan for what happens if additions or changes need to be made.
Specify how changes can be made to your company in a variety of scenarios. For instance, if the change involves new managers, who needs to sign off on that for it to become valid? If the alteration concerns investment concerns or redistribution of profits, will a member vote be necessary? Writing in educated choices about how modifications can be entered into your Nebraska LLC Operating Agreement may save you a great deal of stress later on.
12. Single-Member LLC Statute
If you are going to be the sole member of your LLC, you may have questions about proceeding with certain components of your Nebraska Operating Agreement. Single-member LLCs need strong Operating Agreements as much as multi-member businesses because single-member companies have only one person with 100% responsibility.
Your sole ownership and decision-making power need to be spelled out in your Nebraska LLC Operating Agreement. Aspects of multi-member companies, such as voting rights, may not affect you, but the need for a legal document proving your exclusive ownership remains important. As a sole owner, you have some special opportunities for creativity and autonomy in drafting this document.
13. Severability Provision
As a final precaution, a good Nebraska LLC Operating Agreement must include a severability provision. This is a clause that clarifies the overall staying power of each component or segment of the contract. It specifies that one segment being found faulty cannot nullify or make void any other segment.
Taking this precautionary measure means you never have to worry about redrafting an entire Operating Agreement just because a single mistake was found in the third paragraph of the first draft.
This step further protects you and your fellow Nebraska LLC members from the potential loss of investment income due to small oversights or changes that might need to be made in the Operating Agreement.
Partner With ZenBusiness for Professional Assistance
If the thought of drafting a Nebraska LLC Operating Agreement makes your head spin, never fear. ZenBusiness can support you by offering a customizable Operating Agreement template at an affordable price.
Our team likewise knows how to suggest the best details for keeping your company compliant with local laws so that you never have to worry that you forgot a crucial step.
Updating and Revising Your Nebraska LLC Operating Agreement
A Nebraska LLC Operating Agreement is a living document subject to revisions, changes, and prudent alterations as time goes by. It is impossible to predict every eventuality that your new business will face. For this reason and many others, flexibility on vital company matters should be a built-in component of your Operating Agreement.
Do not write caveats or rules that will make it difficult for you to amend or add things later. Beyond the normal ebbs and flows that will occur in the life span of any business, you should get in the habit of revisiting your Nebraska Operating Agreement regularly, even when no changes are visibly pending. Consider reviewing it when you’re filing your biennial report or if you are updating changes to your registered agent and/or registered office.
Annual meetings are a smart place to schedule updates and alterations to your Nebraska LLC Operating Agreement. Check in with your Operating Agreement to make sure that the wording and structure of key items, such as member duties and voting responsibilities, still align with the way your company is actually running.
The following represent a few easy steps to revise your Operating Agreement:
- Read the document fully to make sure it still matches the goals and trajectory of your company. Remember that you should have written steps on how to change or amend your Nebraska LLC Operating Agreement. When changes are needed, make sure that you are following the rules that you originally wrote.
- Make sure that all agreed-upon or necessary amendments to your Operating Agreement are recorded in writing pursuant to your members voting where needed. No oral agreement should ever stand in for an actual amendment or even a minor alteration.
- Have all members sign. Signatures on the original draft do not apply to added changes, so everyone involved needs to sign again to ensure the legality of the changes.
Some changes may require you to take the added step of updating your official business information with the Secretary of State. Items like changes in designated office or registered agent should always be reported.
Essentially, any item that has been changed from what was reported in your original Certificate of Organization should be filed with the Secretary of State.
Nebraska Operating Agreement FAQs
- Is an LLC Operating Agreement required in Nebraska?
Nebraska LLC registration does not legally require the submission of an Operating Agreement. It is certainly possible, although never advisable, to establish your LLC without one.
- Where do I get an LLC Operating Agreement in Nebraska?
ZenBusiness offers a ready-made template for all of your Operating Agreement needs. No matter the size or goals of your LLC, we can help you with an Operating Agreement that will reflect your company’s unique values.
- Does a single-member LLC need an Operating Agreement in Nebraska?
Yes, an Operating Agreement is advised for both multi-member LLCs and single-member LLCs. With just one person making all of the decisions for the company, having an Operating Agreement ensures a further and more specific degree of separation between yourself and your business. This distinction helps you in terms of legal liability, at tax time, and in other components of handling your business.
- Do I file an LLC Operating Agreement with Nebraska?
No, the Secretary of State will not ask you to submit an Operating Agreement when you file your Certificate of Organization to create your Nebraska LLC.
- Can I write my own LLC Operating Agreement in Nebraska?
Yes, there is no legal requirement that your Nebraska LLC Operating Agreement must be drafted by an attorney or another outside agent. However, enlisting the help of trusted professionals like ZenBusiness takes the stress and guesswork out of the equation and helps your Operating Agreement meet all professional and state incentives for success.
- Do I need a lawyer for an LLC Operating Agreement in Nebraska?
No, there is no law in Nebraska specifying that you must hire a lawyer during the drafting of your Nebraska LLC Operating Agreement. Some people choose to employ a lawyer because they need or want access to details about state-specific laws that may impact their business. Lawyers can also help gauge high-risk scenarios and write protective clauses that pertain to litigation relative to your new company.