LLC Operating Agreement
An operating agreement is the foundation of your LLC, setting the rules for ownership, management, and profit-sharing. It's a vital legal document that helps prevent disputes and protects your business interests. Think of it as a customized roadmap for your company's success.
Last Updated: Sept. 12, 2024
Not sure if you need an Operating Agreement? Learn why these agreements are important -- for both single-member LLCs and multi-member LLCs.
Why Your LLC Needs an Operating Agreement
Every LLC, regardless of size, should have an operating agreement in place. Here's why:
- Legal Protection: It helps to separate personal and business assets, providing a layer of legal protection for the owners.
- Operational Clarity: The agreement clearly defines roles, responsibilities, and processes, reducing the likelihood of internal conflicts.
- State Compliance: Some states require LLCs to have an operating agreement, and even in states where it's not mandatory, it’s highly recommended.
Find the Perfect Operating Agreement Template for Your LLC
What to Include
To get started, simply purchase the template and download it to your device. You can then customize it according to your business requirements. LLC operating agreements commonly include the following important sections:
- Company Formation: Establishes the name, purpose, and duration of your LLC, along with its principal place of business.
- Management and Voting Structure: Defines the member's decision-making authority and responsibilities.
- Capital Contributions: Details the initial contributions made by the member and the process for making additional contributions in the future.
- Distributions: Defines how profits and losses will be allocated and distributed to the member.
- Books, Records, and Tax Matters: Describes the record-keeping requirements and tax-related obligations.
- Dissolution: Describes the process and conditions for dissolving the LLC, including the distribution of assets and liabilities.
- Miscellaneous Provisions: Includes provisions for dispute resolution, amendments, and governing law.
How to Purchase and Use Our LLC Operating Agreement Templates
Follow these simple steps to get your LLC Operating Agreement:
Step 1: Choose the Template that Fits Your Business
Select the appropriate template based on your business structure—whether it's a Single-Member, Multi-Member, Manager-Managed, or Member-Managed LLC. Or if it’s taxed as an S Corporation. We have you covered in all aspects!
Step 2: Complete Your Purchase ($35 per Template)
Add your chosen template to the cart and proceed with the secure checkout process. You’ll receive the template immediately after your purchase.
Step 3: Download and Customize
Download the template in your preferred format. Customize the sections to reflect your LLC’s specific details, including member roles, voting rights, and distribution of profits.
Step 4: Review with Your Partners and Legal Advisor
Once you’ve filled in the details, review the agreement with your LLC members and, if needed, consult a legal advisor to ensure everything is in order.
Step 5: Sign and Store Your Agreement
After finalizing the agreement, have all members sign it. Store the signed document safely and make sure all members have a copy.
Why Choose Our Templates?
- Attorney-Drafted: Our templates are created by experienced legal professionals, ensuring accuracy and compliance.
- Customizable: Easily tailor each template to fit your unique business needs.
- User-Friendly: Our templates are written in plain language and come with step-by-step instructions.
- Affordable: At just $35 per template, you receive a legally compliant, thoroughly detailed document that you can customize to fit your unique business needs.
Legal Definition
An operating agreement is the governing contract adopted by members of a Limited Liability Company (LLC). It lays out the business's course and helps operations and management become more organized. It can be used to regulate nearly all aspects of the LLC's affairs, including how the business is managed, how assets are used, and how revenues are shared. It is similar to articles of incorporation, which control the operations of a corporation. (Cornell Law School)
Operating Agreement FAQs
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What is an operating agreement?
An operating agreement is a legal document that outlines the ownership and operating procedures of a limited liability company (LLC). It covers essential aspects like management structure, profit and loss allocation, voting rights, and dispute resolution processes.
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Do I need an operating agreement for my LLC?
While not always legally required in every state, having an operating agreement is highly recommended for all LLCs. It provides legal protection, establishes clear expectations among members, and can help prevent disputes in the future.
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What should be included in an operating agreement?
Key components of an operating agreement typically include:
- Company information: Name, address, purpose of the LLC
- Ownership structure: Percentage of ownership for each member
- Management structure: How the LLC will be managed (member-managed or manager-managed)
- Voting rights: How decisions will be made and voting power allocated
- Profit and loss allocation: How profits and losses will be distributed among members
- Membership changes: Procedures for adding or removing members
- Dissolution: Procedures for dissolving the LLC
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Can I create my own operating agreement?
Yes, you can create your own operating agreement, but it's highly recommended to consult with an attorney or use a professionally drafted template to ensure it's comprehensive, accurate, and complies with state laws.
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How often should I update my operating agreement?
It's a good practice to review and update your operating agreement periodically, especially when there are significant changes in your business, such as new members, changes in ownership percentages, or changes in the management structure.
If you have more FAQs or want to tailor the answers to your specific audience or offerings, let me know!
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