How to Write an Operating Agreement

Video Transcript

"Hi, my name's Mark, and we're going to look at how to write an operating agreement. An operating agreement are the internal rules and regulations of the organization. What this means is when you set up your private or your limited liability company, you have to have an internal set of rules and regulations that you formally agree to in terms of what you are setting out yourself to achieve with the business. So for example, if there's two or three of you in the business, you all have to agree what your functionality will be within the business and your responsibilities are. Therefore, you need to have these written, and these are what we call the operating terms and agreements in the business. So these internal rules and regulations include responsibilities, functionality, how much you're going to get paid, how much you're going to pay the secretary, the bookkeeper, whatever. These are internal rules and regulations signed by all of the managers, partners, owners of the company. This form or document is easily downloadable online. You'll find lots of templates in which you can write up a business agreement such as this, and it's a very good idea, again, that everybody takes it seriously because this responsibility falls on the shoulders of anyone...everyone involved."