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Who Can Authorize LLC Expenses?

In this audio snippet, you'll hear about:

• It will be a clause in the operating agreement
• Should be a conversation had between members of the LLC before formation

Yosef: There is an auxiliary issue that is addressed differently in different files of operating agreements regarding who is authorized to obligate the LLC for certain expenses. I think that is an area that investors as well as managing members of the LLC have to keep in mind. Depending on the nature of the business, of what they are doing, sometimes it's better to have only one person authorize expenses.

Travis: OK.

Yosef: And sometimes it's better that everybody authorizes expenses.

Travis: OK.

Yosef: There should be discussion. I want you just not assume you should go one way.

Travis: Right.

Yosef: Everybody involved should be comfortable with how the business or the entity is actually going to being executed.

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