The document which controls the internal workings of a limited liability company (LLC) is called an "Operating Agreement". The Operating Agreement is mandatory in some states and optional in others. I highly recommend putting an Operating Agreement in place even if the state you are forming your LLC in does not require one. The typical concerns that are dealt with in an Operating Agreement are: organizational information, capital contributions and loans, all aspects of ownership, banking, books and records, management, meetings, confidentiality, dissolution and liquidation, and amendments to the Operating Agreement.
As an example of the extreme flexibility that an LLC permits, owners, called “Members” in an LLC, can receive different classes of “membership units” – like shares of stock in a corporation – with each different class having different attributes such as voting rights, rights to allocations and distributions of either or both profits or losses, repurchase obligations, or a vesting schedule, as well as many other possible attributes that can be developed to deal with any specific situation.
One of the most important aspects of an Operating Agreement is the section that controls how the LLC is to be managed and by whom. A well thought out and properly drafted Operating Agreement, and especially the management section, will likely prevent litigation between the Members relating to their interests in the LLC. The Operating Agreement can be used very creatively and should not be viewed as a “boilerplate agreement”. I have used carefully planned and strategically drafted Operating Agreements to legally obtain exceptional results for clients that would not have been possible using any other type of business entity.