When starting a new business, one of the first steps is creating an operating agreement. This document sets out the rules and procedures that the company will follow, including how decisions will be made and how profits will be distributed. However, many entrepreneurs are hesitant to create an operating agreement because they are concerned about the cost.
The truth is that the cost of an operating agreement can vary widely depending on a number of factors. Here are some things to consider when estimating the cost of creating an operating agreement:
Legal Fees
The most significant cost associated with creating an operating agreement is typically the legal fees. If you hire an attorney to draft the agreement for you, you can expect to pay several hundred to several thousand dollars depending on the complexity of the document and the experience of the attorney.
Online Services
If you are looking to save money, there are online services available that can help you create an operating agreement for a fraction of the cost of hiring an attorney. Companies like Rocket Lawyer and LegalZoom offer customizable templates that you can use to create your own agreement. These services typically charge a one-time fee ranging from $50 to $300.
DIY
If you have some legal knowledge and are willing to put in the time and effort, you can also create your own operating agreement from scratch. There are a variety of free resources available online that can guide you through the process. However, it`s important to note that creating your own agreement can be risky if you don`t have a strong understanding of the legal requirements.
Factors Affecting Cost
The cost of an operating agreement can vary based on a number of factors, including the size and complexity of the business, the number of owners, and the specific provisions included in the document. For example, if your business is relatively simple with only one owner, your operating agreement will likely be less expensive than a complex business with multiple owners.
Conclusion
Creating an operating agreement is an important step in starting a new business, but it`s also important to consider the cost. Whether you hire an attorney, use an online service, or create your own agreement, the cost will vary depending on a number of factors. It`s important to weigh the cost against the potential benefits of having a well-drafted operating agreement in place.
