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There are many online services that will help you draft your LLC operating agreement (I cannot recommend any one in particular due to the terms of this forum, but there are many available - and there are even templates that you can use with a word processor to draft your own.
Considerations you should take can be found in this comprehensive article regarding drafting of an LLC agreement (particularly to protect your interest as a passive member of the business): http://www.nolo.com/legal-encyclopedia/llc-operating-agreement-30232.html
Hello, I hope you are well.
The pitfalls and issues you are looking to avoid (particularly when you are only asked for money and to remain passive) are to ensure that you have a right to review any obligations the LLC may undertake, and to have the right to review the company books with reasonable notice and in a timely manner (usually no more than 30 days, but that is up to you). You should also ensure that you include a mechanism to dissolve the LLC without having to resort to a court order (a 50/50 LLC with no internal mechanism to dissolve (who gets what and who is responsible for what) is invaluable.
You can incorporate instead of forming an LLC, a corporation is more structured (you must take certain steps, and follow certain formalities with a corporation that you do not need to do in an LLC), but the ultimate decision between the two is usually based on what the best tax implications will be for the members/shareholders.
Are there any example opearating agreements which talks about mechanism to dissolve?
Please give me another moment, I am seeing if I can locate something - this is usually something that you will need to draft based on your respective cash investments and what valuation you place on one another's personal efforts/work. Even if you are a passive investor now, you may be more active later, planning for some form of distribution will help.
Here is an article regarding this specific issue: http://www.americanbar.org/publications/blt/2013/07/01_haskins.html
Okay Thanks I will go through this.
Is Legalzoom decent to use?
I have heard they are responsive, take care to note the exact terms of the agreement you are using, and feel free to make changes as appropriate.
I hope the above is helpful, if you have any questions please do not hesitate to let me know and I will follow up quickly.
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