Good morning! 

What’s brewing this fine Thursday:

1. Don’t Let Your LLC Die With You – A simple operating agreement ensures your business survives. (3 min read)

2. A Corporate Transparency Act update – YES, another one. It might be dead, but why does it still have a pulse? (1 min read)

3. Coming up this Sunday – Part Two on smart strategies for growing your LinkedIn Company Page. Missed Part One? Click here to catch up.

Let’s make this the week you lock in your LLC’s future.

-TCoL

You started your LLC. You’ve got liability protection, tax flexibility, and maybe even a logo you’re proud of. But if you don’t have an operating agreement, you’re leaving a gaping hole in your business’s foundation. Without one, your LLC could dissolve the moment you do, and your hard work could end up tangled in probate court.

This isn’t a legal technicality. It’s about making sure your business survives if something happens to you. If you’re a single-member LLC (SMLLC) owner, an operating agreement isn’t optional—it’s essential. Let’s get into why.

What’s an Operating Agreement, and Why Should You Care?

An operating agreement is your LLC’s rulebook. It spells out ownership, profit distribution, management roles, and—most importantly—what happens if you’re no longer around. For multi-member LLCs, it’s like a prenup. For SMLLCs, it’s a plan to keep your business alive.

Most states don’t mandate an operating agreement. Only three—California, New York, and Missouri—do. In the other 47, it’s up to you. But skipping it means your business will be subject to default state laws, which don’t always align with what’s best for you, your heirs, and employees.

The Probate Nightmare: What Happens If You Die Without a Plan

If you own an SMLLC and pass away without an operating agreement, your business dissolves. Your assets—whether it’s a consulting firm, an online store, or an AI startup—become part of your estate. That means probate court, a process that can drag on for months or even years.

Probate is slow, expensive, and public. Your heirs won’t just inherit your business; they’ll inherit a legal mess. A judge will decide what happens to your LLC, and in some states, that means automatic dissolution.

A simple way to avoid this? Name a successor in your operating agreement. Some states even allow a transfer-on-death clause, which lets your LLC pass directly to your chosen heir, skipping probate entirely.

The safest course of action is for you to have a revocable trust in your estate plan and name the trustee of your revocable trust, not you personally, as the member of the LLC.

The Real-World Cost of Not Having One

A 2021 Review of Finance study found that when startup founders died, their companies saw a 60% drop in sales and a 17% loss in jobs. Survival rates plummeted. Without clear leadership succession, businesses flounder. Even established companies struggle when a founder dies unexpectedly.

If your LLC is new, you might think you don’t need to worry about this yet. But the hard reality is that 90% of startups fail, and 10% don’t make it past year one. If something happens to you in those critical early years, an operating agreement can keep your business from vanishing overnight.

How Many LLCs Have Operating Agreements?

It’s hard to say for sure because operating agreements aren’t publicly filed. But estimates suggest that 60-80% of LLCs have them. That means 20-40% are leaving their businesses exposed. Among SMLLCs, the number believed to be even worse, since many solo owners assume they don’t need one. That assumption is a mistake.

The Bigger Picture: Why This Matters Even If You’re Healthy and Young

An operating agreement isn’t just about what happens when you die. It also makes running your business easier while you’re alive.

It can help you:

Clarify how decisions are made, even if it’s just you now. If you bring on a partner or an investor down the line, you’ll already have a framework in place.

Make your business more credible. Banks, lenders, and investors take LLCs with formal agreements more seriously. If you ever need financing, having an operating agreement can work in your favor.

Protect your legacy. Without one, your LLC is subject to default state laws that rarely align with a founder’s intentions.

What You Should Do

If you don’t have an operating agreement, fix that today. We can provide you with a professional template (see link below), hire an attorney, or draft one yourself (but make sure it’s legally sound). If you’re an SMLLC, include a successor clause and look into transfer-on-death provisions in your state.

An operating agreement shouldn’t be considered optional paperwork. It’s the difference between your business thriving or disappearing if something happens to you.

Get to work developing an operating agreement now and give yourself—and your family and team—peace of mind.

Need a simple “sole member” Operating Agreement template for your LLC? Subscribe to The Co. Letter ^TM Premium here and get it, along with all templates provided with our articles. Be smart, save money, get things done.

Old Business:

CRITICAL UPDATE: The Corporate Transparency Act

What is the new update?
On 27 February 2025, the U.S. Treasury’s Financial Crimes and Enforcement Network (FinCEN) issued new guidance stating that, for now, “[i]t will not issue any fines or penalties or take any other enforcement actions against any companies based on any failure to file or update beneficial ownership information (BOI) reports pursuant to the Corporate Transparency Act (CTA) by the current deadlines” (which is 21 March 2025). Read the full guidance document here.

Then, President Trump posted this:

Note that it says, “for U.S. Citizens.” That means that there is still some life (and applicability) left in the CTA for non-citizens.

What is the CTA?
The CTA is a 2021 federal law requiring all U.S.-formed or registered entities to either confirm they qualify for an exemption or submit a BOI to FinCEN.

I already filed—now what?
You’re set. No further action needed.

Can I file voluntarily while the CTA is on hold?
Yes. FinCEN is accepting early filings. You can submit yours here. No penalty for waiting, but beware: FinCEN’s system is new and may get overwhelmed as the deadline nears.

Will the new Trump administration scrap the CTA?
Likely for U.S. domestic entities but NOT for foreigners that own businesses in the U.S. Upcoming rule making and current litigation could lead to significant changes. Also, the small business lobby is out in full force putting pressure on the Trump Administration and lawmakers to do away with the CTA or significantly restrict its applicability.

We’ll keep tracking this. If you spot a reliable update before we do, reply or DM @thecoletter on X or LinkedIn.

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