If you`re starting or running a professional service business with multiple owners, forming a professional limited liability company (PLLC) could be a smart move. However, before you finalize your PLLC formation, you`ll need to create a PLLC operating agreement.

A PLLC operating agreement is a legal document that outlines the ownership, management, and operational details of the PLLC. It`s essentially a contract between the PLLC members that sets the foundation for how the business will be run.

Here are some key components to include in your PLLC operating agreement:

1. Ownership and management structure: The agreement should specify how ownership of the PLLC is divided among the members, as well as how decisions will be made. This could include details on voting rights, appointment of officers, and overall management structure.

2. Capital contributions: PLLC members typically contribute capital to the business, and the operating agreement should outline how much each member is contributing and how the funds will be used.

3. Profits and losses: Your PLLC operating agreement should outline how profits and losses will be allocated among members. This could include a percentage-based split or other arrangement agreed upon by the members.

4. Liability and indemnification: PLLCs provide liability protection for owners, but the operating agreement should still address how liability will be handled in case of lawsuits or other legal issues. Additionally, the agreement should lay out any indemnification provisions to protect members from financial harm.

5. Dissolution and buyout provisions: It`s important to prepare for the possibility of the PLLC dissolving or a member leaving the business. Your operating agreement should define how these situations will be handled and how assets will be distributed.

Creating a PLLC operating agreement can be complex, so it`s important to have knowledgeable legal counsel to guide you through the process. However, taking the time to develop a comprehensive agreement can help ensure that your PLLC runs smoothly and that all members have a clear understanding of their role and responsibilities.