How Much Does a New York Operating Agreement Cost?
The cost of an operating agreement will vary depending on the length and complexity of the document. However, based on ContractsCounsel’s marketplace data, the average cost of a project involving a New York operating agreement is $803.33 [1].
What is a New York Operating Agreement?
An operating agreement is a legally binding document that defines the rules, procedures, and structure of a Limited Liability Company (LLC).
Operating agreements include key information about the business, such as:
- Management structure
- Daily operations
- Governance
- Investments
- Taxes
- Profit sharing
These internal company documents are contracts executed by an LLC’s owner or members.
In New York, state laws require that all LLCs have a written operating agreement. The agreement doesn’t have to be filed with the state, but it must be drafted and signed within 90 days of the LLC filing Articles of Organization.
Operating agreements are important documents and provide LLC owners in New York with the following benefits:
- Proof of company ownership
- A tangible document outlining company policy and procedure
- Reinforcement of limited liability status
- An override of New York default tax laws
- Conflict resolution among LLC members
New York LLC owners are encouraged to consult an attorney with experience drafting operating agreements. An attorney will know how to custom tailor an operating agreement to fit your business’s needs, protect members, and take advantage of tax benefits.
What’s Included in a New York Operating Agreement?
Operating agreements will vary based on the type of business and whether the LLC is a single-member LLC or a multi-member LLC. An attorney will customize the agreement to fit the needs of the company. Still, the following terms are included in most standard operating agreements:
- Organization. The basic details of the company include the date of establishment, a New York address for the company, the names of all members, and the ownership structure.
- LLC activities. The purpose of the business and what services or goods are provided to customers.
- Voting rights. How decisions are made within the company.
- Management. Whether the LLC is member-managed or manager-managed.
- Initial contributions. How much capital each member contributed to starting the LLC.
- Profits, losses, and distributions. How the company’s profits and losses are distributed among the members.
- Transfer of membership interest. Rules for adding and removing members, transferring membership, and what happens if a member dies.
- Dissolution. The ways a company can be dissolved.
- Signatures. Each member must agree to and sign the operating agreement. The agreement should be on file in a safe place and accessible to all members.
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Who Needs an LLC Operating Agreement in New York?
Under New York statute NY LLC L § 417, all members of a New York LLC must adopt a written operating agreement within ninety days of filing the LLC Articles of Organization. In addition, any LLC owner or member must have an operating agreement for their business.
New York requires businesses to maintain a copy of the operating agreement and maintain copies of any amendments to the agreement.
New York Operating Agreement Projects
Operating Agreement Drafting in New York
New York is one of the few states that requires a written operating agreement by law, so many business owners turn to experienced business lawyers to draft this important document. An attorney will know what information needs to be included in the operating agreement to protect the LLC members and follow New York State regulations.
Before drafting an operating agreement, the attorney will consult with the LLC owner or members. The lawyer needs to learn about the business, the day-to-day operations, the management structure, and all the details of how the business functions to prepare a customized operating agreement.
Operating Agreement Review in New York
Operating agreement templates are widely available, so it isn’t uncommon for business owners to draft their own LLC operating agreement. However, the problem with these templates is that they are often vague and not state specific.
Before using an operating agreement created from a template, an LLC owner is encouraged to have the understanding reviewed by an attorney.
Operating agreements are legally binding contracts that are required by New York law. Therefore, it is important that an operating agreement is drafted correctly and includes all pertinent information.
An attorney will read over the operating agreement to ensure it is properly customized to the needs of the business and adheres to New York laws and regulations.
How Much Does it Cost to Draft a New York Operating Agreement?
Hiring an attorney in New York to draft an operating agreement will incur legal fees because it requires the time and expertise of a licensed lawyer to complete the project.
ContractsCounsel’s marketplace data shows that the average operating agreement drafting costs in New York are $865.00.
How Much Does it Cost to Review an Existing New York Operating Agreement?
Document review will also incur legal fees, although these fees are often less than drafting projects. The attorney will take time to consult with the LLC partners, read over the operating agreement, and make suggestions for revisions.
ContractsCounsel’s marketplace data shows that the average operating agreement review costs in New York are $741.67.
How Do New York Lawyers Charge for an Operating Agreement?
Hourly Rates for Operating Agreements in New York
Many New York attorneys use an hourly fee structure to bill their clients. Hourly rates allow lawyers to track all the time they spend working on a task or case and bill the client at a set rate for their time.
Depending on the length of the project, some lawyers will bill the client monthly, while others will send one bill after the case. The downside to hourly rate billing is that the client won’t know the total cost of legal services until after representation has ended.
ContractsCounsel’s marketplace data shows that the average hourly rate for a business lawyer in New York ranges from $200 - $350 per hour.
Flat Fee Rates for Operating Agreements in New York
Instead of charging hourly for drafting projects, many attorneys will opt to use a flat fee rate fee agreement. When using a flat fee, the lawyer will use their experience to determine a fair rate for legal services. If the client agrees to the price, they will pay upfront, and the lawyer will begin work on the project.
The advantages of flat rate billing are that the lawyer receives payment up front, and the client knows exactly what the cost of legal services will be before agreeing to hire the lawyer.
The client must clearly understand what is included in the fee agreement. For example, additional legal services will usually incur additional fees.
ContractsCounsel’s marketplace data shows that the average flat fee rate for an operating agreement in New York is $803.33.
Get Help with an Operating Agreement in New York
Do you need help with a New York operating agreement project? If so, post a project in ContractsCounsel’s marketplace to receive flat fee bids from business lawyers who are licensed to practice law in New York. All lawyers on the ContractsCounsel’s platform are vetted by our team to make sure you are provided with top tier service.
