Operating Agreements and Shareholder Agreements

Written By John Kim

📃 Operating Agreement vs. Shareholder Agreement: What’s the Difference and Why Do You Need Them?

Essential legal documents for LLCs and Corporations

If you’ve started a business with a partner, investor, or co-founder, you’ll need to clearly define how the business will operate, how profits are distributed, and how decisions are made.

Without the right legal agreements, you may run into disputes, tax issues, or conflicts over ownership — especially as your business grows.

That’s where Operating Agreements and Shareholder Agreements come in.

✅ What Is an Operating Agreement?

An Operating Agreement is primarily used for LLCs (Limited Liability Companies) and outlines the internal rules of operation and the rights and responsibilities among members (owners).

Key contents include:

  • Ownership percentages and capital contributions

  • Profit and loss distribution

  • Voting rights and decision-making rules

  • Guidelines for adding or removing members

  • Dissolution procedures

  • Role and responsibility definitions

Why is it important?

  • State law only provides basic default rules — your agreement customizes how your business actually runs.

  • It helps prevent disputes, supports your tax structure, and builds trust with partners and investors.

✅ What Is a Shareholder Agreement?

A Shareholder Agreement is used for Corporations, and it governs the relationships between shareholders, including how ownership is transferred and how the company is managed.

Key contents include:

  • Restrictions on selling or transferring shares

  • Rights and responsibilities of shareholders

  • Structure and power of the Board of Directors

  • Minority shareholder protections

  • Exit strategy planning (retirement, sale, death, etc.)

Why is it important?

  • Prevents conflicts between founders and investors

  • Clarifies expectations and governance

  • Adds a layer of legal protection for all parties

  • Essential for attracting investment and long-term planning

🧾 How KOAM CPAs Can Help

  • ✅ Drafting and reviewing Operating Agreements for LLCs

  • ✅ Assisting with Shareholder Agreements for Corporations

  • ✅ Evaluating tax and ownership risks from a CPA perspective

  • ✅ Referring to attorneys for legal review and notarization

  • ✅ Planning for S-Corp ownership structures and tax optimization

📞 Need Professional Help?

Running a business without a proper agreement is like driving without brakes.
Unified Consulting & Tax (KOAM CPAs LLC) can help you build a clear, stable foundation for your business from the start.

👉 [Request a Consultation]
☎️ 215-917-0964
✉️ Support@koamcpallc.com

John Kim
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