The One Legal Document Every NC LLC Should Review in January

Last week, I talked about making one strategic improvement to your business in 2026—one meaningful change that addresses a real pain point and makes your business life better.

If you own a North Carolina LLC, I'm going to make this easy for you. I know exactly what that one improvement should be: reviewing your operating agreement.

I realize that's not the most exciting suggestion. It's not a new marketing strategy or a productivity hack. But here's the truth: your operating agreement is the foundation of everything your LLC does. And if it's outdated, incomplete, or nonexistent, you're building your business on shaky ground.

LLCs Are Creatures of Contract

Here's something many North Carolina business owners don't realize: the LLC statute in our state is intentionally bare-bones. It's designed that way to give business owners maximum flexibility.

The law provides basic rules for how LLCs function, but it expects you—the business owners—to create your own more detailed rules through a written operating agreement. The statute essentially says, "Here's the minimum framework. Now go contract with each other about how you actually want to run this thing."

That flexibility is an advantage. It means you can structure your LLC to fit your specific business, your particular ownership situation, your unique goals. But that flexibility only works if you actually use it. And that means having a solid operating agreement in place.

What Happens Without One

I've seen what happens when LLC owners skip this step or rely on a bare-bones template they downloaded years ago and never updated.

Two business partners have a falling out, but there's no clear process for one to buy out the other. A member wants to leave but the operating agreement doesn't address how to value their interest. Co-owners disagree on a fundamental business decision and reach complete deadlock—with no mechanism to resolve it.

In these situations, people end up in expensive disputes that could have been prevented with clear agreements made when everyone was still on good terms.

What Your Operating Agreement Actually Needs to Cover

A proper operating agreement addresses the real governance of your LLC:

• Decision-making authority. Who decides what? Which decisions require unanimous consent versus majority vote? What happens when members disagree?

  
  

• Financial arrangements. How are profits and losses allocated? When and how are distributions made? What happens if the business needs additional capital?

  
  

• Buy-sell provisions for involuntary transfers. What happens if a member dies, becomes disabled, gets divorced, or goes bankrupt? Without proper provisions, you could end up in business with your co-owner's ex-spouse, heir, or bankruptcy trustee. Your operating agreement should clearly spell out what happens in these situations and how remaining members can purchase that departing member's interest.

  
  

• Deadlock provisions. If you have two 50/50 owners (or any ownership structure where deadlock is possible), what's the mechanism for resolving it? Mediation? Arbitration? A buy-sell triggered by deadlock? Without these provisions, a deadlocked LLC can become paralyzed.

  
  

• Exit strategies. Eventually, every business relationship ends—through retirement, sale, disagreement, or other life changes. Your operating agreement should include clear procedures for voluntary withdrawal, valuation methods for purchasing interests, and payment terms that work for both the exiting member and the continuing business.

What Review Actually Looks Like

If you already have an operating agreement, pull it out. Read it with fresh eyes. Ask yourself:

• Does this still reflect how we actually run the business? Many operating agreements were drafted at formation and never updated as the business evolved.

  
  

• Does this address what would happen if one of us wanted out, or had to get out? Life changes. Businesses change. Partnerships change.

  
  

• Would this agreement actually resolve a dispute, or would it just create more questions? Vague language doesn't help when conflicts arise.

  
  

• If you don't have an operating agreement—or if you have one of those fill-in-the-blank templates that barely addresses any substantive issues—now is the time to fix that.

Why This Matters

I know this isn't as energizing as talking about growth strategies. But here's what I've learned from years of working with North Carolina business owners: the businesses that thrive long-term are the ones that handle the unglamorous foundational work.

Your operating agreement protects your business relationships. It protects your investment. It protects your ability to actually run your company without getting mired in preventable disputes.

And because North Carolina deliberately designed the LLC statute to be flexible and minimalist, having a comprehensive operating agreement isn't just best practice—it's essential. The statute won't fill in the gaps for you. You have to do that work yourself, through clear contractual terms with your co-owners.

Your Strategic Improvement

This is exactly the kind of work a business attorney can help with—not just drafting the technical language, but facilitating the important conversations about governance, exits, and dispute resolution that lead to a truly functional agreement.

But whether you handle this with legal help or tackle it yourself, make it your priority. Review your operating agreement. Update what needs updating. Create one if you don't have one.

Need help updating your operating agreement? Contact us to discuss how we can help your business succeed.