Colorado LLC Operating Agreement

Every Colorado LLC should have an operating agreement in place. 

While not legally required by the state, having a written operating agreement will set clear rules and expectations for the management and operations of your LLC.

Download our free Colorado operating agreement template below or sign up to create a custom operating agreement using our free tool.

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Free Colorado LLC Operating Agreement Templates

We offer operating agreement templates for single-member LLCs and multi-member LLCs (including member-managed and manager-managed) as well as a customizable operating agreement tool.

Single-Member LLC Operating Agreement

Our single-member LLC operating agreement template was created for limited liability companies with only one member, where the sole member has full control over all affairs of the LLC and no other individuals have a membership interest in the company.

Multi-Member LLC Operating Agreements

Our multi-member LLC templates are meant for LLCs with more than one member. There are two types available: manager-managed and member-managed.

Create Custom Operating Agreement

Create a custom operating agreement using our free tool. Just answer a few basic questions, and the tool will develop an operating agreement for your new LLC.

To use our tool, you will need to sign in to our Business Center. A Business Center account will also grant you access to many other free tools, special discounts on business services, and much more. 

TRUiC’s Operating Agreement Tool

Use our free tool to create a custom operating agreement for your LLC.

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What Is a Colorado LLC Operating Agreement?

An operating agreement is a legal document that outlines the ownership structure and operating procedures of an LLC.

Whether you are starting a single-member or multi-member LLC, your operating agreement should address all of the topics below. Some of these stipulations will not have much bearing on the actual operations of a single-member LLC, but are still important to include for the sake of legal formality.

1. Organization: When the LLC was officially formed, who its members are, and how ownership is divided. Multi-member LLCs may utilize an equal ownership structure or assign various members different “units” of ownership.
2. Management & Voting: Whether the LLC will be managed by its members or by an appointed manager, and how members will go about voting on business matters. Typically, each member has one vote, but you may wish to give some members more voting power than others. For more information on managing your LLC, read our Member-Managed vs Manager-Managed guide.
3. Capital Contributions: The amount of money each member has invested in the business. This is also where you should establish an approach to raising additional funds in the future.
4. Distributions: How profits and losses will be divided among the members. The most common option is to distribute profits evenly. If you want them divided a different way, this should be detailed in your operating agreement. For more information on the basics of LLC ownership, read our Contributions and Distributions guide.
5. Changes to Membership Structure: How roles and ownership will be transferred in the event that a member leaves the company. It’s essential to lay out the process for buying out and/or replacing a member in the LLC’s governing document.
6. Dissolution: Dissolution: If at some point all the members of your LLC decide you no longer wish to conduct business, you should officially dissolve it. Outlining the hypothetical process of dissolving your business is an important aspect of your operating agreement. To learn how to dissolve your Colorado LLC, read our Colorado LLC Dissolution article.

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Why Should I Have a Colorado LLC Operating Agreement?

No matter what type of Colorado LLC you're starting, you'll want to create an operating agreement. Here's why:

1. It’s recommended by the state. According to CO Business Statutes Section 7-80-108, every Colorado LLC may adopt an operating agreement to govern the company’s operating procedures.

2. It'll prevent conflict among your business partners. If you're starting a multi-member LLC, having an operating agreement will prevent misunderstandings amongst your team by setting clear expectations about each partner's role and responsibilities.
3. It helps preserve your limited liability status. If you're the sole owner of a single-member LLC in Colorado, having an operating agreement will help to ensure your limited liability status is upheld by court officials, and add to your business' credibility as a whole.

The full text of the statute can be found below:

1. 

a. The operating agreement may contain any provisions for the affairs of the limited liability company and the conduct of its business to the extent such provisions are consistent with law. Except as otherwise provided in subsection (1.5), (2), or (3) of this section, an operating agreement governs the rights, duties, limitations, qualifications, and relations among the managers, the members, the members' assignees and transferees, and the limited liability company. Such provisions shall control over any provision of this article to the contrary except as set forth in subsection (1.5), (2), or (3) of this section. To the extent the operating agreement does not otherwise provide, this article shall control.
b. A limited liability company is bound by any operating agreement of its members.
c. An operating agreement may be entered into before, after, or at the time of filing of articles of organization and, whether entered into before, after, or at the time of such filing, may be made effective as of the formation of the limited liability company or as of the time or date provided in the operating agreement.

(1.5) To the extent that a member or manager or other person that is a party to, or is otherwise bound by, the operating agreement has duties, including, but not limited to, fiduciary duties, to a limited liability company or to another member, manager, or other person that is a party to or is otherwise bound by an operating agreement, the duties of such member, manager, or other person may be restricted or eliminated by provisions in the operating agreement, as long as any such provision is not manifestly unreasonable.
2. An operating agreement may not:

b. Unreasonably restrict the rights of members and managers under section 7-80-408 ;
d. Eliminate the obligation of good faith and fair dealing under section 7-80-404 (3) ; except that the operating agreement may prescribe the standards by which the performance of the obligation is to be measured, if such standards are not unreasonable;
e. Eliminate or modify the provisions of section 7-80-801 (1)(c)(I) , except to extend the time set forth therein to a time not later than the first anniversary of the date of the termination of the membership of the last remaining member; or
f. Restrict rights of, or impose duties on, persons other than the members, their assignees and transferees, and the limited liability company without the consent of such persons.

(2.5) 

(a) An operating agreement may contain one or more provisions concerning the enforcement, interpretation, construction, application, severability of provisions, integration, effect of parole evidence, and other matters with respect to the operating agreement or any of its provisions.
(b) Unless otherwise provided in the operating agreement, if any provision of an operating agreement or application thereof to any person or circumstance is unenforceable or otherwise invalid under subsection (1.5) or (2) of this section or otherwise, the provision shall be limited, construed, and applied in a manner that is valid and enforceable, and, in any event, the remaining provisions of the operating agreement shall be given effect without the invalid provision or application.
(c) Unless otherwise provided in the operating agreement with respect to the unenforceability, invalidity, or application of any provision of the operating agreement under subsection (1.5) or (2) of this section, when it is claimed or appears to the court that any provision of the operating agreement may violate subsection (1.5) or (2) of this section, the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose, and effect, to aid the court in making the determination.

3. Unless contained in a written operating agreement or other writing approved in accordance with a written operating agreement, no operating agreement may:

d. Vary any requirement under this article that a particular action or provision be reflected in a writing.

4. It is the intent of this article to give the maximum effect to the principle of freedom of contract and to the enforceability of operating agreements.
5. An operating agreement is not subject to any statute of frauds, including section 38-10-112, C.R.S., regarding void agreements, but not including any requirement under this article that a particular action or provision be reflected in a writing.

After Creating Your Colorado LLC Operating Agreement

Once you have finished your operating agreement, you do not need to file it with your state. Keep it for your records and give copies to the members of your LLC.

Following any major company event, such as adding or losing a member, it is a good idea to review and consider updating the operating agreement. Depending on how your operating agreement is written, it may require some or all of the members to approve an amendment to the document.

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