06/11/2026
Forming a limited liability entity (corporation or limited liability company) is a fairly easy process in most states. You simply need to file a one or two-page formation document (Certificate of Formation in Texas) and pay the requisite filing fee. This is often the point where new entrepreneurs stop. Or they may go a bit further and use an online service which provides a one-size-fits-all governing document (company operating agreement or bylaws). They feel they have protected themselves from liability and future problems. Unfortunately, this alone is not enough if they fail to follow operational formalities. Nor do these limited steps address many potential issues that can arise later with ownership, transfers, or disputes between owners. These can be just as problematic as potential exposure to liability from the business operations. Relying on the default or statutory provisions is not a good answer, as they are often lacking or result in unexpected outcomes when these situations arise. Without detailed internal governing document(s) to resolve them, the owner(s) often face costly and time-consuming challenges down the road.
Learn more:
How Business Governing Documents like LLC operating agreements and corporate bylaws protect ownership rights, and prevent costly disputes.