Two people can agree to start a business and still have different understandings of who controls it. One expects a salary. The other expects profits to stay in the company. Both believe they can sign customer contracts. Neither has decided what happens if one stops working.
An operating agreement is the place to resolve those questions while the relationship is working. Its value comes from how clearly it describes the owners’ actual arrangement.
Start with the agreement the owners think they have
Maryland law permits an LLC operating agreement to address management, sharing assets and earnings, transfers, admission of members, voting, and amendments. The initial agreement must be agreed to by all then-current members. Subject to the statute and the articles of organization, an operating agreement need not always be written. A signed written document still provides a much clearer record of the bargain. See Maryland Corporations and Associations § 4A-402.
Before drafting, ask each owner to describe the arrangement separately. Differences in those descriptions reveal the decisions that need attention. Do this before treating a template’s percentages and signature lines as the finished agreement.
Separate ownership, work, and compensation
Put the initial contributions on paper: cash, equipment, intellectual property, customer relationships, or services. If an owner promises future work, describe the work and discuss what happens if it is not performed. Identify whether later cash contributions are loans, additional equity, or optional funding.
Then address pay for work. An ownership percentage does not explain whether a working member receives compensation before distributions, who approves that compensation, or how much cash stays available for taxes and operations. Coordinate those provisions with the company’s tax adviser.
Make signing authority usable
Decide who can approve ordinary purchases, hire employees, borrow money, sign a lease, settle a dispute, or guarantee an obligation. A practical approach is to distinguish routine decisions within an approved budget from decisions requiring broader consent.
For example, a modest subscription and a multiyear lease create different commitments. Discuss spending limits, approval records, and the person responsible for maintaining the company’s contract file. The agreement should match how the owners will actually run the business.
Address a disagreement before it stops operations
A 50/50 ownership split deserves a workable deadlock process. Consider a required discussion, mediation, a defined decision mechanism, or a negotiated buyout procedure. Each has tradeoffs. A buy-sell clause can favor the owner with easier access to financing unless the valuation and payment terms are carefully designed.
Test the proposed language against a concrete disagreement: both owners want different office locations, the current lease is expiring, and the business must decide within thirty days. Who can act, and what happens if no agreement is reached?
Plan for an owner’s departure
Discuss voluntary withdrawal, death, disability, divorce-related transfers, termination of employment, and an attempted sale to an outsider. Set out how an interest is valued, when payment is due, and whether the business can afford the payment schedule.
Keep intellectual-property assignments, employment terms, guarantees, and insurance arrangements consistent with the operating agreement. A signed ownership document will not answer every issue created by a separate contract.
Bring the formation documents, ownership expectations, contribution records, and any existing agreements to a business-law consultation. Those materials help identify which terms need a deliberate decision before the company takes on more obligations.
General information, not legal advice for a particular matter. The applicable documents, facts, and deadlines control.