No Operating Agreement? Your Family Business will become a Family Nightmare!
Family members, whether related by blood, community, or faith, all too often enter into business with one another without an operating agreement. Their reasoning? They always say, "This person is my family. They would never cross me or burn me in business!"
An Operating Agreement is a contract between the owners of an LLC that governs how the business will be run. This is an important contract and is crucial to the processes of the business. Without an Operating Agreement, your "Family Business" will turn into a "Family Nightmare". Trusting someone simply because "they are family", is the quickest way for your business to crash and burn.
Let's face it, with family you get comfortable, extremely comfortable. Oftentimes, you take that family member on their word and not their actions. There are no clear roles, delegations, and responsibilities of each member of the business. This confusion will show up in your business and financial records.
If your family member truly loves and respects you, they will have no problem sitting down with you and creating an Operating Agreement. Keep the family business, a business, and not a nightmare.