What is the difference between Articles and an Operating Agreement?
The Articles of Organization (like Articles of Incorporation in a Corporation) list down the rules and agreements of the formation of the Company. They are listed and written up on the day the company is formed. and are submitted to the Secretary of State in the State where the company will operate. The Operating Agreement (like Bylaws in a Corporation) are the rules and agreements about how the company is to operate. This is especially important where partners are involved since they serve as the agreement by which each person is bound in the operation of the company. The Operating Agreement also provides direction for the company and authorizations for members of the company to perform their duty as well as enter into agreements, such as banking, purchases, investments and other major decisions the company may need to make from time to time. During an audit or litigation, the Operating Agreement provides the back-up for decisions made and how the company has been run.
