What is an Operating Agreement and Bylaws, and Why Do I Need Them?

Bylaws include the rules and regulations that govern a corporation; an operating agreement fulfills a similar function for a limited liability company. These documents may contain information about the organization's structure and ownership, management, voting, and rights and responsibilities of members or directors. While these documents, unlike articles of incorporation or organization, need not be filed with the state, they are still important. In addition to being a blueprint for the operation of the organization, banks and lenders may expect to see them when opening accounts or providing financing for the organization. Prospective investors will want to examine them as well.

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