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Why is an Operating Agreement important?

The Operating Agreement is the contract of a LLC - a shareholders agreement. The Operating Agreement is not mandatory in all states of the U.S. It is in many U.S. states not mandatory. However, it is often important that an Operating Agreement exists. Without a corresponding provision in the Shareholders Agreement, the LLC would dissolve, for example, if one of its members leaves the company. The contract is usually an important criteria for the German tax authorities when it comes to the corporation or partnership classification of the LLC in Germany.

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