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hi Im John with launch small business legal Solutions done differently I thought Id talk a little bit today about operating agreements so LLCs are one of the most common type of business entities that actually small businesses forming I think its important to understand how an operating agreement comes into play and why you need one so the key of starting a limited liability company or an LLC is so that you can take some steps to limit your personal liability now a big part of that is putting in place an operating agreement an operating agreement is an internal document youre typically not required to file it with the state and it lays out sort of how the company will operate and adds an additional layer of protection to show that youve taken the steps necessary to limit your personal self from the business so an operating agreement is a foundational document for the company it outlines the companys functions the decisions operational concerns financial decisions decision making