What is an essential restriction for forming an LLC?

Forming a Limited Liability Company (LLC) typically requires that the members (or owners) enter into a legally binding agreement, often referred to as an operating agreement. This document outlines the management structure, the rules for the operation of the business, and the rights and responsibilities of the members. Although many states do not require a written operating agreement to form an LLC, it is essential for outlining expectations and protecting members' interests. This legally binding contract provides clarity and can help prevent disputes among members by setting guidelines for how decisions are made and how profits and losses are shared.

The other options do not represent essential restrictions for forming an LLC. For example, it is not necessary for at least one member to be a corporation, nor do all members need to reside in the same state, as LLCs allow members from different states to come together. Additionally, while there may be some regulatory requirements regarding liability disclosures, this is not a foundational restriction for forming an LLC.