operating agreement sole proprietorship
an operating agreement is similar to the bylaws that guide a corporation's board of directors and a partnership agreement. an operating agreement that is not in writing won't help you if you are audited by the state or are involved in a lawsuit. the most important reason to form a solo business owner to form an llc rather than operating as a sole proprietor is to protect the owner from personal liability from business activities. your operating agreement should include a clause stipulating who will manage the llc if you are unable to do so. if an llc has no operating agreement, it is subject to the "default rules" of the state in which the llc is organized.