An LLC Operating Agreement is a legal document that outlines the ownership and member duties of your Limited Liability Company.
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This Operating Agreement template is for use by a Limited Liability Company 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.
Single-Member Operating Agreement Template
Better Option: Create a Custom Operating Agreement
Use our free, easy-to-use tool to create a custom operating agreement for your LLC.
Features of the tool include:
- Single-member or multiple-member LLCs
- Member-managed or manager-managed LLCs
- Ability to add custom sections and clauses
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What Is An Operating Agreement?
An LLC Operating Agreement is a legal document that outlines the ownership and member duties of your Limited Liability Company. This agreement allows you to set out the financial and working relations among business owners ("members") and between members and managers.
The contents of an LLC operating agreement differ depending on the number of owners in your LLC.
If you are the sole owner of your business, then you need an operating agreement for a single-member LLC.
If your business has multiple owners, then you will need one for a multi-member LLC.
Generally speaking, an operating agreement should address the following six topics:
- Organization of your LLC. Who are the LLC members, and what are their shares of ownership?
- Management. Who is responsible for running the business? How will major business decisions be made?
- Capital Contributions. How will the operations of the LLC be funded?
- Distributions. How will the profits of the LLC be distributed among the owners?
- Membership Changes. Will the LLC be able to add new members later on? What is the process for removing an existing LLC member?
- Dissolution. If and when the owners decide to dissolve the LLC, how will that happen?
Although there are other minor topics that can be included in an operating agreement, these six sections are the most important.
To learn more about the finer details, read our guide, “What is an Operating Agreement?”
Does My Business Need An Operating Agreement?
The significant protections offered by an operating agreement make it a crucial document for any business. That being said, most states don’t require businesses to have an operating agreement, and no state requires your operating agreement to be on file in their records.
The following states require all LLCs to have operating agreements:
Even if an Operating Agreement is not required in your state, we strongly recommend creating one:
- If you are the sole owner of an LLC (Single Member LLC):
Creating an operating agreement brings credibility to your LLC. This helps to ensure courts uphold the limited liability status of your LLC by strengthening your corporate veil.
- If you have business partners (Multi-Member LLC):
An operating agreement will help prevent misunderstandings by setting clear expectations about partner roles and responsibilities. Going into business without an operating agreement is never recommended, but when you have partners or other members involved, this document becomes an invaluable asset to your future success.
Given the importance of this document and the fact that we provide free custom operating agreements, there is virtually no reason that your business should go without.
What Is The Purpose Of An Operating Agreement?
Operating agreements exist for three main reasons:
- Protect your business’s limited liability status
Without an operating agreement in place, it is possible that you may incur personal liability for your business activities. Businesses without this document resemble sole proprieties or partnerships. This could totally negate the effect of your limited liability protection.
- Solidify member agreements
Agreements between members of an LLC are unenforceable if they are not recorded in writing. Verbal agreements are common in new business ventures, but miscommunications or disagreements can jeopardize the viability of a business if you don’t have written guidelines to help solve these issues.
- Prevent the state from managing your agreements
In the event that the state needs to step in to manage your business they will follow the guidelines set forth in your operating agreement. If you don’t have this document, the state will be forced to use their default rules to govern how this agreement is handled.
After Creating Your 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.
To begin creating your custom LLC operating agreement, create an account in the TRUiC Business Center to use our operating agreement tool. Don’t worry, all of our tools are free
The documents above are provided "AS IS" and with "ALL FAULTS." We disclaim any warranties, including but not limited to warranties of fitness for a particular purpose. The Documents may be inappropriate for your particular circumstances. By downloading the documents, you agree that this is not intended to and does not constitute legal advice, recommendations, mediation or counseling under any circumstance, and that no attorney-client relationship is formed.