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(4 minute read)

It was the classic startup dream: three friends, each with complementary skill sets, bootstrapping their way to success. Their small manufacturing business took off quickly, fueled by a high-demand market and a well-timed social media strategy. They had no marketing budget, no dedicated team—just a shared Instagram account that steadily grew to 75,000 followers. The account became a cornerstone of their brand, drawing in customers and filling up trade show booths.

Then, like many growing businesses, they hit “good” problems: backlogged orders, the need for new hires, and cash flow pressures. Stress mounted, and cracks formed in the partnership.

The Problems Intensify

One co-founder, the least experienced of the trio, grew disillusioned. Resentment turned to conflict, and then to something worse—he personally controlled the Instagram account. And there was no operating agreement spelling out what happened in a situation like this.

The disgruntled co-founder did what too many angry partners do: he took the company’s social media presence hostage. He started posting negative messages about his co-founders and the business. Sales dropped. Customers got spooked. The co-founders had no solid legal grounds to force Instagram to hand over control. Worse, their business structure—an LLC without an operating agreement—offered no clear path forward.

Within months, the company collapsed. The two remaining founders had to start over from scratch, creating a new business with an Instagram account at zero followers. Four years later, they’ve only clawed back 8,000.

Lessons Learned (the Hard Way)

Warren Buffett once said, “It takes 20 years to build a reputation and five minutes to ruin it.” He might not have been talking about Instagram accounts, but he might as well have been.

Could a strong operating agreement have saved the company? Maybe not. But it sure would have made the fallout easier. If they had retained control of their 75,000 followers, the new business wouldn’t have had to start from zero.

This is why no entrepreneur should operate—or invest in—an LLC without an operating agreement. It’s like dying without a will: state laws kick in, but they are blunt instruments, ill-equipped for modern disputes like social media account control.

How to Protect Your Business from This Mess

If you’re in business, your digital assets—your website, social media accounts, blogs, newsletters—are just as critical as your trademarks, customer lists, and bank accounts. Yet many founders and CEOs fail to protect them.

If your operating agreement doesn’t include a digital asset protection clause, now’s the time to fix that. Below is sample language designed for a manager-managed LLC. If you have a member-managed LLC or a corporation, an attorney can tweak it accordingly.

Section 1. Company websites, social media accounts, blogs, newsletters, and all other forms of Company communications and marketing (collectively, “Digital Assets”) are the SOLE AND ABSOLUTE property of the Company REGARDLESS of the manner in which they are titled, administered, managed, updated, or altered. The Parties acknowledge and agree that many third-party sites require that an individual be the listed owner or manager of a Digital Asset account; however, regardless of such a requirement, Digital Asset accounts shall at all times be the sole and absolute property of the Company.

A. Account Control. Digital Asset accounts shall only be opened and maintained utilizing a Company email address. Current usernames and passwords to all Digital Asset accounts shall be maintained by the Manager. Members shall have the right to request login credentials in writing, which shall be provided by the Manager within three (3) days. If a username or password is changed to a Digital Asset account, the Manager shall be notified in writing within three (3) days of any such change.

B. Transfer of Control. Upon written request of the Manager or a member, the Manager, member, or employee that controls a Digital Asset account shall, within three (3) days, transfer all title, administration, and management authority of the Digital Asset account(s) to a party designated in the writing. Further, the Manager or member in question shall promptly make all applications or changes on the third-party website or application to complete the requested transfer regardless of whether the Manager or member has resigned, been terminated, or is no longer a member of the Company.

C. Posting. The Manager and members shall not, directly or indirectly, post any communication to a Digital Asset account that is knowingly false, misleading, or disparaging to the Company, its members, employees, or customers. No post shall mention, reference, or infer the existence of any disagreement, dispute, or complaint that the person posting may have with the Company, another member, or employee.

D. Death of the Manager, Member, or Employee. To the fullest extent allowed by law, the Parties agree that the provisions of this Section 1 shall, upon the death of the Manager, a member, or employee, apply to and be enforceable against the personal representative, trustee(s), and heirs of the deceased Manager, member, or employee.

E. Survivability. The Parties agree that the provisions and enforceability of this Section 1 shall survive the death of the Manager, a member, employee, and any form of termination of this Agreement.

Do It Now

A decade ago, social media accounts weren’t make-or-break business assets. Today, they are. If you’re running an LLC, you need a digital asset clause to protect your business.

One more critical issue: whenever possible, all digital asset accounts should be created and maintained under a company-issued email address, not a personal one. Otherwise, you’re just one bad breakup away from losing control.

Where should you put these protections?

• Corporations: By-laws, policies, or key executive employment agreements. By-laws are best.

• Manager-managed LLCs: In the operating agreement (see suggested language above).

• Member-managed LLCs: In the operating agreement appropriately modified for a member-managed LLC (see suggested language above).

• Sole-member LLCs: Even if you’re the only owner, have an operating agreement between you and your LLC. If you pass away, you don’t want your business assets—including your social media accounts—locked up in legal limbo.

Bottom line: Protect your business. Don’t let a password or a bad breakup take it down.

Need an Operating Agreement template for your LLC that includes a digital asset protection clause? Subscribe to The Co. Letter ^TM Premium here and get it for free along with all templates provided with our articles. Be smart, save money, get things done.

Old Business:

CRITICAL DEADLINE UPDATE: The Corporate Transparency Act

(2 min read)

What’s the Latest?
The Corporate Transparency Act (CTA) has been on hold due to ongoing federal litigation. Now, a new 21 March 2025, deadline looms for nearly all limited liability companies (LLCs) and corporations to file their Beneficial Ownership Information (BOI) report with the U.S. government.

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 Beneficial Ownership Information Report (BOI) to the U.S. Treasury’s Financial Crimes and Enforcement Network (FinCEN).

What’s the deadline for NEW entities formed on or after 18 February 2025?
The 30-day filing rule still applies. For example, an LLC formed on 20 February 2025, must file its BOI report by 22 March 2025 (30 days from formation).

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?
Unlikely. While legal challenges could lead to changes, social media chatter is pressuring lawmakers to delay, limit the scope, or repeal the CTA.

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

New Business:

Upcoming Thursday Edition, 27 February 2025

Should Your Business be Politically Neutral or Pick a Side?

These days, it feels like every company is expected to take a stand. But should yours?

This Thursday, we’re breaking down the pros and cons of running a politically neutral business—or leaning left or right. Is neutrality even possible? And if not, which choice makes the most sense for your bottom line?

We’ll dive into the risks, rewards, and hidden pitfalls that business owners face when politics enters the equation. No spin, no bias—just a clear-eyed look at the landscape so you can decide what’s right for you.

It’ll be a great read with practical takeaways. And if we do our job right, everyone will think we’re on their side.

Feedback on this issue? You can reply directly to this email or message us on X @thecoletter. Please follow us on X while you are there. Thank you!