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LLC Operating Agreement — forming LLC for freelance business

Started by melissa_h_28 · Dec 25, 2023 · 2,847 views · 2 replies
For informational purposes only. This is not legal advice. Laws vary by jurisdiction. Consult a qualified attorney for advice specific to your situation.
MH
melissa_h_28 OP

Has anyone dealt with something like this? I'm not sure what my options are.

forming LLC for freelance business. I've been dealing with this for about 9 weeks now and the situation isn't improving.

I have already tried to resolve this directly but the other party is not cooperating.

Should I hire a lawyer for this or try to handle it myself?

SR
samantha_r_27

I work in this industry and unfortunately this is very common. The good news is that when people actually push back with legal representation, companies usually settle.

QU
quietobserver_1 Counsel

Colorado attorney here — the advice above is solid. Let me add some legal nuance:

Veil piercing risk is real for SMLLCs. Colorado courts apply the Micciche v. Billings factors: commingling of funds, failure to maintain separate records, undercapitalization, and disregard of LLC formalities. An operating agreement is Exhibit A of "formalities" — it's your first line of defense if someone sues you personally for an LLC obligation.

Key clauses every freelancer SMLLC operating agreement needs:

  1. Purpose clause — keep it broad ("any lawful business") so you're not boxed in
  2. Management clause — state that you, as sole member, have full management authority
  3. Capital contributions — document the initial $5K and state whether additional contributions are required
  4. Distributions — state that you can take distributions at any time at your discretion (important for S-Corp election if you go that route)
  5. Dissolution clause — what happens if you die, become incapacitated, or just want to shut down
  6. Indemnification clause — protects you in your capacity as manager from LLC liabilities

One thing people miss: keep minutes or written records of major decisions, even as a sole member. If you decide to take on a $50K project, buy equipment over $5K, or sign a lease — write a one-paragraph "Member Resolution" and file it with your operating agreement. Courts look at this when assessing whether you treated the LLC as a real entity.

For a solo freelancer at $120K revenue, a template-based operating agreement is fine. You don't need $500 worth of custom drafting unless you're planning to bring on partners, take on investors, or have unusual IP ownership questions.