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Limited liability company (LLC) operating agreements typically state how profits will be divided. An operating...

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Accounting

Limited liability company (LLC) operating agreements typically state how profits will be divided. An operating agreement is not necessary for the formation of an LLC, and even if there is an operating agreement, it does need not to be in writing. Generally, though, members protect their interests by signing a written operating agreement that spells out the terms of their LLC, including a division of profits and losses. If there is no agreement covering how profits will be divided, the applicable state LLC statute will govern. Most LLC statutes provide that if members do not specify how profits are to be divided, they will be divided equally. If there is no operating agreement or LLC statute addressing the particular issue, the principles of partnership law apply. Those principles also indicate that profits are divided equally among the owners of a firm unless specified otherwise.

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