Harmonizing Ancestral Wisdom with Modern Business Practices: The S Corp Operating Agreement Template
The Importance of an S Corporation Operating Agreement
Waitaha Books teaches us the values of our ancestors in creating a link in the chain of sacred transmission to our children and grandchildren where we strive to leave the world better than it was given to us and our descendants to come. The Waitaha value is shared by many tribal nations, but it is also no more relevant today in how a custom operating agreement template outlines the communications related obligations and expectations of the parties to a modern day business deal. An comprehensive S corp operating agreement template could be defined as an oral tradition, but it is much more complex than that. When it comes down to making a deal on a handshake these days, we need stronger business custom that will carry out the same outcomes.
An S corporation is a business structure made available to all businesses in the United States. It is very similar to a limited liability company (LLC) in several ways. It is available for small businesses that are trying to limit their overall tax exposure and limit their personal liability. This is accomplished in two ways. First, it allows the business to be taxed as an S corporation, which allows the business to avoid income tax by passing through the business income to the owners. The owners then simply pay personal income tax on this income on their personal income tax return. The S corporation also shields the owners from personal liability for any contracts or business obligations. Thus, the owners’ personal assets cannot be attached to satisfy a lawsuit against the business entity.
The S corporation is formed and exists under the laws of the state in which the articles of incorporation are filed. Thus, the first step in forming an S corporation is filing Articles of Incorporation with the state. Appropriately preparing your Articles of Incorporation helps to ensure that your corporation is properly formed. To do this, you must list the name of the corporation, the number and type of shares the corporation is authorized to issue, the corporation’s registered agent and any additional information as required. Having a corporate attorney develop your corporate agreements is typically more beneficial than using a corporate agreement template. A corporate attorney will have experience in dealing with for profit corporations.
Perhaps the greatest advantage of a corporate attorney writing your corporate agreement is that he or she can customize the agreement to specifically meet the needs of your corporation. Typically, corporate agreements are separated into two parts, internal rules and external rules. Internal rules are those that govern interactions among shareholders and others within the corporation. These are typically rules that deal with the operational procedures within a corporation. External rules are those that govern interactions between the corporation and outsiders. These typically deal with the corporation’s business arrangements. In essence, the S corp operating agreement template acts in many ways as the S corporation equivalent of treaties, exemplifying the founding of a corporation, defining the source of political authority, and the relationship between the state and the corporation.
While the written tradition is not common to the Waitaha, it certainly has its origins in an oral history tradition that was transmitted from one generation to another. It seems that the S corporation method is now more widespread than it was a century ago, and that the need for the S Corporation Operating Agreement Template is far more common than it was generations ago. As a matter of fact, Custom was once a part of the human experience that did not have to be taught to either party – it was inherently passed down from generation to generation, with the S Corp Operating Agreement Template acting as a repository for the cultural knowledge. When we create an agreement we follow the same process that was used by our ancestors forming the fundamental structure of the S Corporation. The Operating Agreement is just as important as the creation of a communication between two parties, directly or indirectly.
This does not mean that you cannot train in communication skills over time. It does mean you must follow the philosophies and culture of your tribe, whether it be an NJ LLC, a Michigan corporation, a Florida partnership, or a California LLC or corporation. This means that there may be methods of communication that are appropriate in some cultures but not others (i.e. sport; music; art; etc.). At any rate, clear business practice operates best under a well defined set of rules in a mutually agreed upon manner. As it relates to the S corporation agreement, or “treaty”, the business understood those fundamental aspects of the business’ liability and taxation structure under the terms of the “treaty”, and the same held true within the realm of the tribe. The S corporation concept was clearly defined and fully accepted by those forming the agreement, and all parties were able to place their trust in the agreement.
These days the importance of a Treaty is highlighted by the fact that similar agreements are regularly entered into in other walks of life, such as international agreements. The S Corporation Operating Agreement Template is a tradition that has evolved over time, but in many ways has not changed from the time of the origin to the present. When two parties engage in forming an S corporation, they can carry forward the traditions of a historic agreement in a modern setting by laying out the terms of the S corporation in a legally binding document. Rituals once again play a role in S corporation agreements, as they apply to the specifics of the agreement itself. Rituals that apply to S corporation agreements may include the method of operations, the expectations of members and managers, the communication process, procedures for handing up changes, and expectations for bringing about the dissolution of the treating. While rituals can be identified in S corporation agreements, the innate advantage of an S corporation operating agreement is that the business can elect how it will operate. This means that the S corporation agreement is inherently flexible, as a company can modify the agreement to truly serve their advantage.
The flexibility of the S corporation agreement is what makes it a dominant form of communication among businesses today. Because the S corporation agreement template is inherently adaptable, it can serve a variety of purposes while maintaining its primary objectives. When it comes to describing the needs and wants of the corporation, the purpose of the S corporation agreement template is to identify both the nature of the business and the desires of the shareholders. This serves the purpose of effectively communicating the needs of the corporation and the capabilities of the shareholders, thereby achieving a balance within the group. The S corporation agreement template was created to add value to the business, and can be done in such a way that the business is virtually self-regulating.
