When starting a business, there are several legal documents that you need to create, including a corporate resolution and an operating agreement. Both of these documents are essential in outlining the structure and management of your company. However, the terms can be confusing, and it is essential to understand the differences between the two.

Corporate Resolution

A corporate resolution is a document that outlines decisions made by a corporation`s board of directors. It is a written record of the actions taken by the board, and it is often used to memorialize significant decisions. These decisions can include things like electing officers, borrowing money, entering into contracts, or purchasing assets.

A corporate resolution is usually required when a corporation wants to take a significant action or enter into a legally binding agreement. This document shows that the board of directors has authorized the action and that the corporation is acting within its legal authority.

Operating Agreement

An operating agreement is a legal document that outlines the management structure of a limited liability company (LLC). It governs the internal operations of an LLC and outlines the roles, responsibilities, and decision-making processes of the owners.

An operating agreement is not required by law, but it is highly recommended for any LLC. It can help prevent disputes among owners, protect the liability protection of the company, and clarify the ownership structure.

The main differences between a corporate resolution and an operating agreement lie in their structure and purpose. A corporate resolution is a formal record of the actions taken by the board of directors of a corporation. In contrast, an operating agreement outlines the management structure of an LLC and the responsibilities of its owners.

In summary, a corporate resolution and an operating agreement are both essential legal documents that play a significant role in the governance and management of a business. Understanding the differences between the two can help you determine which document is necessary for your company and ensure you have the proper legal documentation in place.