avoid internal dissension by documenting important policies and rulesĪn S corp operating agreement is one created specifically to govern the operations of a regular corporation (C corp) or LLC that elects to be taxed under subchapter S of the Internal Revenue Code.įor more information, see our guide What Is an LLC Operating Agreement?. It is designed to document the policies and rules that govern the internal operations of the business so that members and employees are aware of what they are and to ensure that “everyone is on the same page.” Specifically, an operating agreement is meant to: This includes how it’s owned and operated and how its profits are to be distributed. An operating agreement is a contractual document that lays out how a business is structured and how it is to conduct important activities.
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