Washington D.C. LLC Operating Agreement
Every Washington D.C. 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 Washington D.C. operating agreement template below or sign up to create a custom operating agreement using our free tool.
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Free Washington D.C. 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.
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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.
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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.
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What Is a Washington D.C. LLC Operating Agreement?
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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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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 Washington D.C. LLC, read our Washington D.C. LLC Dissolution article.
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Why Should I Have a Washington D.C. LLC Operating Agreement?
No matter what type of Washington D.C. LLC you're starting, you'll want to create an operating agreement. Here's why:
- It’s recommended by the district. According to the Code of the District of Columbia, Uniform Limited Liability Company Act of 2010 § 29-801-07, all members of a DC LLC may enter into an operating agreement to regulate the internal affairs of the company.
- 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.
- It helps preserve your limited liability status. If you're the sole owner of a single-member LLC in Washington D.C., having an operating agreement will help to ensure your limited liability status is upheld by court officials, and add to your business's credibility as a whole.
The full text of the statute can be found below:
(a) Except as otherwise provided in subsections (b) and (c) of this section, the operating agreement shall govern:
(1) Relations among the members as members and between the members and the limited liability company;
(2) The rights and duties under this chapter of a person in the capacity of manager;
(3) The activities and affairs of the company and the conduct of those activities and affairs; and
(4) The means and conditions for amending the operating agreement.
(b) To the extent the operating agreement does not otherwise provide for a matter described in subsection (a) of this section, this chapter shall govern the matter.
(c) An operating agreement shall not:
(1) Vary a limited liability company’s capacity under § 29-801.05 to sue and be sued in its own name;
(2) Vary the law applicable under § 29-801.06;
(3) Vary the provisions of § 29-802.04;
(4) Subject to subsections (d) through (g) of this section, eliminate the duty of loyalty, the duty of care, or any other fiduciary duty;
(5) Eliminate the contractual obligation of good faith and fair dealing under § 29-804.09(d), but the operating agreement may prescribe the standards, if not manifestly unreasonable, by which the performance of the obligation is to be measured;
(6) Unreasonably restrict the duties and rights stated in § 29-804.10;
(7) Vary the causes of dissolution specified in § 29-807.01(a)(4) and (5);
(8) Vary the requirement to wind up a limited liability company’s activities and affairs as specified in § 29-807.02;
(9) Unreasonably restrict the right of a member to maintain an action under Subchapter 8 of this chapter;
(10) Restrict the right to approve a merger or domestication under § 29-809.10 or Chapter 2 of this title of a member that will have personal liability with respect to a surviving, converted, or domesticated organization;
(11) Except as otherwise provided in § 29-801.08 or 29-801.09(b), restrict the rights under this chapter of a person other than a member or manager.
(12) Vary any requirement, procedure, or other provision of this title pertaining to:
(A) Registered agents; or
(B) The Mayor, including provisions pertaining to records authorized or required to be delivered to the Mayor for filing under this chapter;
(13) Relieve or exonerate a person from liability for conduct involving bad faith, willful or intentional misconduct, or knowing violation of the law; or
(14) Vary the provisions of § 29-808.05, except that the operating agreement may provide that the company may not have a special litigation committee.
(15) [(15)]Vary the power of a person to dissociate under § 29-807.01, except to require that notice of dissociation be in a record.
(d) Subject to subsection (c) of this section, without limiting other terms that may be included in an operating agreement, the following rules apply:
(1) The operating agreement may specify the method by which a specific act or transaction that would otherwise violate the duty of loyalty may be authorized or ratified by one or more disinterested and independent persons after full disclosure of all material facts.
(2) To the extent the operating agreement of a member-managed limited liability company expressly relieves a member of a responsibility that the member would otherwise have under this chapter and imposes the responsibility on one or more other members, the operating agreement may, to the benefit of the member that the operating agreement relieves of the responsibility, also eliminate or limit any fiduciary duty that would have pertained to the responsibility.
(3) If not manifestly unreasonable, the operating agreement may:
(A) Restrict or eliminate the aspects of the duty of loyalty stated in § 29-804.09;
(B) Identify specific types or categories of activities and affairs that do not violate the duty of loyalty;
(C) Alter the duty of care, but may not authorize willful or intentional misconduct or knowing violation of law; and
(D) Alter or eliminate any other fiduciary duty.
(h) The Superior Court shall decide, as a matter of law, any claim under subsection (c)(5) or (d)(3) of this section that a term of an operating agreement is manifestly unreasonable. The court:
(1) Shall make its determination as of the time the challenged term became part of the operating agreement and by considering only circumstances existing at that time; and
(2) May invalidate the term only if, in light of the purposes and activities and affairs of the limited liability company, it is readily apparent that:
(A) The objective of the term is unreasonable; or
(B) The term is an unreasonable means to achieve the provision’s objective.
After Creating Your Washington D.C. 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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Frequently Asked Questions
Yes. Although you won’t file your operating agreement with the state, having an operating agreement in place is the best way to maintain control of your D.C. LLC in the face of change or chaos.
While it's a good idea to create an operating agreement before filing your Articles of Organization, the state does not discourage LLCs from waiting until the formation process is complete. It's worth noting that some banks require you to submit an operating agreement in order to open a business bank account.
No. Operating agreements are to be retained by the LLC members. There is no need to submit this document with the D.C. Department of Consumer Affairs.