What is an LLC Operating Agreement?
An LLC Operating Agreement is a legal document that outlines the ownership and operating procedures 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
LLC's in California, Delaware, Maine, Missouri, Nebraska, and New York are legally required to have an operating agreement.
Even if an Operating Agreement is not required in your state, it is strongly recommended to have one:
- If you have business partners (Multi-Member LLC):
An operating agreement will help prevent misunderstandings by setting clear expectations about partner roles and responsibilities.
- 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 limited liability status of your LLC.
Use our free template to create a operating agreement for your LLC.
Download a Free Sample Operating Agreement
Create a free account to download our operating agreement. Please keep in mind that this operating agreement is only meant as a reference.
To download: Upon logging into account scroll through the tiles of your DASHBOARD page. Select the "Free Legal Forms" tile. Press download icon for "Free Sample Operating Agreement".
Our template includes all of the commonly used provisions of operating agreement:
Article I: Organization
This section outlines the existence of your limited liability company and describes the general structure of your business, distinguishing it from a sole-proprietorship, s-corp, c-corp, etc.
Article II: Member Information
This section records the name(s) of the business owner(s) and records their respective share of ownership of the business. Note: If you are a single-member LLC, then you will assume 100% ownership, similar to sole proprietorship, but without risk to your personal assets.
Article III: Member Voting
This section clarifies voting rights as it relates to member shares. Any changes that are made to the business must be voted on by the members.
Article IV: Managers
This section clarifies the role of potential non-member managers.
Article V: Membership Transfer
This section declares that member shares are to remain as defined [in Article II] unless unanimously approved by all members.
Article VI: Amendment
This section clarifies that any changes to the operating agreement must be defined and approved by majority vote.
An operating agreement is an internal company document. You do not need to file it with any state or government agency, regardless of where you form you LLC. Distribute a copy to all key member and management personnel and store a copy in a safe place along with the rest of your important business documents.
Following any major company event, such as the departure or addition of a new member, it is a good idea to review and consider updating the operating agreement. An operating agreement can always be amended with the consent of all current members.