Table of Contents
The LLC Operating Agreement is a legal document that governs your company’s internal operations, including the rights and responsibilities of members, management, purpose and more. This article has templates you can use to create one for free in minutes!
The “llc operating agreement template word” is a free and easy-to-use LLC operating agreement template that can be used for any type of business. It includes the necessary legal terms and conditions to create an LLC, as well as other important information like your company’s name, address, etc.
An LLC operating agreement is a legally binding compact between members that specifies how earnings and losses are distributed, as well as whether your LLC is administered by members or by managers. It is used to settle member disagreements, assign tasks, and more. Although operating agreements aren’t usually needed by law, having one drafted by an attorney or legal agency to include in filing papers is a good idea.
Rocket Lawyer is an excellent alternative to hiring an attorney to assist you with your LLC’s legal choices. Check out Rocket Lawyer if you want to save money on hourly legal costs. For $39.99 per month, you may receive operating agreement templates, document reviews, and legal consultations. For 7 days, you may try it for free.
Go to Rocket Lawyer for more information.
Templates for Operating Agreements for Limited Liability Companies (LLCs) are available for
This free operating agreement template has eight articles that detail the ownership and member responsibilities of your LLC. The management and tax structure of your company, as well as the conditions of dispute resolution and other information that will help you run your business, are all important parts. Use these free LLC operating agreement templates to define your LLC’s structure and maintain control over things like administration, taxes, and profit sharing.
- Operating agreement for a single-member LLC (.DOCX,.PDF, Google Doc): If you’re the only proprietor of your business, use this template. The most typical form for a single-member LLC is member-managed, but you may also use the single-member template to create a manager-managed organization.
- Operating agreement for a multi-member LLC (.DOCX,.PDF, Google Doc): If your business has several owners, this is the template to use. If your business will be managed by a group of managing members or a third-party manager, use the template’s member-managed language; otherwise, use the template’s member-managed language.
If you want to formalize your LLC’s management structure but don’t want to spend money on a lawyer, the templates above are an excellent place to start. If you have a more complicated business or want to be sure you’re following all of your state’s laws, an LLC operating agreement from Rocket Lawyer may be a better option. For $39.99 per month, you may receive operating agreement templates, document reviews, and legal consultations.
Go to Rocket Lawyer for more information.
Find out who your members are.
The individuals who have a legal ownership stake in your LLC are called LLC members. A limited liability company (LLC) may have one or more members, and the structure of your LLC operating agreement is determined by this difference. Make sure your LLC’s members are listed in the Articles of Organization you submit with your state, and that your operating agreement properly reflects that structure.
LLCs with just one member
A single-member LLC is one in which one person or organization owns all of the company’s shares. Operating agreements are particularly useful for preventing conflicts between many members, but they may also assist a single-member LLC by overriding state default guidelines for how the LLC would be managed if no agreement is in place. If you default, though, you’ll have to follow state-specific default management and member authorization regulations.
An operating agreement can assist solidify your limited liability status by isolating your LLC from you as a person, in addition to eliminating the ambiguity of default rules. One of the distinguishing features of an LLC is that its members are not individually responsible for the company’s debts and other obligations. In the lack of an operating agreement, your LLC may seem to be more of a sole proprietorship than a limited liability corporation.
If your business just has one member, use our single-member template. You’ll indicate whether your LLC is administered by you as a member or by a third-party management in the template. Choose the template language that best fits the structure of your LLC.
LLCs with several members
Operating agreements are especially useful for multi-member LLCs since they define the company’s ownership, management, and voting structure. By defining each member’s power and clarifying voting rights, profit distribution, and what happens if a member chooses to quit the business, the legally binding agreement minimizes the risk of conflicts amongst members.
An operating agreement for your multi-member LLC is recommended to prevent conflicts between members and to offer a fast, predictable settlement in the event of a dispute. Establish each member’s capital contributions, voting rights, and what will happen if a member quits the business.
If your LLC has two or more members, use our multi-member template. An LLC having many owners is known as a multi-member LLC. You’ll indicate whether your LLC is administered by a single member, a group of members, or a third-party management in the form. Choose the template language that best fits the structure of your LLC.
Intro to the LLC Operating Agreement Template.
Check out our post on LLCs and how to create one for additional information. Check out our guide on filing for an LLC with your secretary of state if you’re ready to start organizing your LLC with the state.
The structure and substance of your LLC operating agreement are influenced by whether you have a single-member or multi-member LLC. Multi-member LLCs are more complex, requiring sections on dispute resolution, voting rights, and other topics. Rocket Lawyer’s staff of on-call lawyers can assist you with writing your operating agreement if you’re establishing an LLC.
Go to Rocket Lawyer for more information.
2. Article I: Compile a list of the most important facts about the company.
Organize the specifics of your LLC once you’ve decided on your ownership and management structure. Article I’s goal is to describe your LLC, therefore provide information such as your name, main address, and registered agent. To correctly identify your business, provide precise information in Article I of your eight-article operating agreement.
The following provisions should be included in your operating agreement’s Article I:
- LLC name: This is the name that the secretary of state’s office will use to identify your LLC.
- Registered agent: Enter the name and address of the person or company you designated as your LLC’s registered agent when it was formed. For assistance selecting the appropriate registered agent for your LLC, see our guide to registered agents.
- Your LLC’s filing state and main address will decide whether you must submit your operating agreement with the secretary of state’s office.
- Term: Keep your single-member LLC flexible by allowing the member to disband the business at any time. If you have a multi-member LLC and wish to restrict when members may dissolve it, add additional precise criteria like a majority vote or circumstances that make the company’s operation illegal.
- Continuance: State that if the firm has at least one surviving member, that person may opt to continue the company’s operation.
- In your operating agreement, include a statement of purpose. This statement may be extremely wide, such as “perform any and all legal business,” depending on your state, but it should be consistent with the purpose stated in your Articles of Organization.
- Your LLC’s principal place of business is the address from which it will operate. Check your secretary of state’s website for local regulations. Some states need your main place of business to be located inside the filing state’s boundaries.
- Members’ names: Your company’s owners are called members. Begin your writing of the operating agreement by identifying one or more of your members.
- How to Add Members: Describe how new members may be accepted to the business in this area. For example, you might stipulate that no new members can be added without the current members’ unanimous written agreement.
Article I of the LLC Operating Agreement Template.
Article I of the LLC Operating Agreement Template.
4. Article II: Capital Contributions in Detail
The cash or property that each member gives to the LLC when it is formed is known as initial contributions. In the operating agreement, note each member’s contribution and, if applicable, their share of ownership in the business. Under general, in Article II of your operating agreement, explain the overall contributions and identify the specific contributions in an exhibit.
Article II of the LLC Operating Agreement Template.
In most cases, early contributions are made in return for a share of the company’s ownership. A capital interest is a donation in return for ownership that is usually equivalent to the proportion of the business that a member owns. Include the entire amount of each member’s contribution and information about how it’s distributed in an exhibit to complete this section of the operating agreement correctly.
Exhibit 2 of the LLC Operating Agreement Template.
5. Describe how profits and losses are shared under Article III.
Article III lays forth how earnings and losses will be distributed among the members. In a multi-member LLC, profit distribution is usually calculated based on each member’s ownership share as stated in Exhibit 1 of your operating agreement. Operating agreements, on the other hand, allow you the freedom to alter percentages and decide when earnings are paid to members.
Calculate Profits and Losses
The money generated and lost in a particular year is referred to as a company’s profits and losses. Depending on their ownership stake or other criteria specified in your operating agreement, these funds may be split among LLC members. In case anyone’s financial obligations are called into question, document how earnings and losses will be divided in your operating agreement.
You will earn 100% of profits and suffer 100% of losses as the only member of an LLC. With a multi-member LLC, though, it’s more essential to spell out how earnings and losses will be shared in your operating agreement. List the participants in the agreement and their respective earnings and losses, ensuring that everything equals up to 100 percent. In general, percentages correspond to each member’s ownership stake in the LLC, but if your members agree, you may select any amount.
Describe the various distributions.
For the job they perform for the business, LLC members do not get a compensation. Rather, they get paid a percentage of the company’s earnings and losses. Determine if your members will get dividends quarterly, yearly, or at another frequency that makes sense for your business by consulting your LLC’s operating agreement.
Include language in Article III of your operating agreement stating that available money should be calculated and dispersed yearly or at more frequent intervals as the members see appropriate if you wish to maintain a flexible distribution schedule. To ensure that you’re complying with IRS rules and submitting the appropriate paperwork, have your distribution schedule evaluated by a certified public accountant or tax attorney.
Select a Tax System
A sole proprietorship or partnership is the default tax structure for an LLC. You may, however, alter your tax structure to that of a C company or S corporation by filing with the IRS under specific situations. Include the necessary wording in Article III of your operating agreement, whether you’ve already registered your LLC with the state or intend to do so in the future.
In general, an LLC may be taxed in the following ways:
- Taxation as a single proprietorship or partnership: Depending on the number of members, LLCs are taxed as sole proprietorships or partnerships by default. Because earnings are recorded on individual member tax returns, LLCs do not pay their own taxes. You don’t need to add any particular wording in Article III of your operating agreement if you intend to keep the default taxing structure for an LLC.
- Corporations, on the other hand, pay taxes twice: once on net earnings and again on dividends as part of their members’ personal tax returns. You may choose whether your LLC is taxed as a S company or a C corporation, each of which have unique benefits in specific situations. If your members have business obligations that aren’t matched with their ownership shares, consider corporate taxation. Check out our comparison of LLCs, S corporations, and C corporations to see which is best for your business.
Include wording in Article III of your operating agreement to offer yourself the option of having your LLC taxed as a corporation in the future. Declare that members have the option to be classified as a C corporation at any moment.
Because the distinctions between LLC tax structures are so subtle, you should speak with a tax expert before deciding what’s best for your business. On identify the appropriate tax structure for your firm, see our small business owner’s guide to LLC taxes.
Article III of the LLC Operating Agreement Template.
The profit distribution and tax structure you choose for your LLC will have a significant effect on your company’s finances. To assist you in making financial choices for your LLC, we suggest contacting an attorney or a tax expert. If you want to save money on hourly attorney or CPA costs, consider signing up for Rocket Lawyer’s monthly membership plan and consulting with one of their On Call lawyers.
Go to Rocket Lawyer for more information.
6. Choose a Management Structure (Article IV)
The bulk of management-related language in your operating agreement is found in Article IV and is dependent on how your LLC is run. LLC controlled by a managers limit management to managing members or a third-party manager; member-managed LLCs allow all members to make choices. In Article IV of your operating agreement, provide language relevant to your management structure.
The following are the two LLC management structures:
LLC that is run by its members
Every member of a member-managed LLC has the power to bind the business. All of your company’s owners may establish bank accounts, sign contracts, and make other binding choices under this structure. Choose this structure if you don’t mind all of your LLC’s members being involved in the company’s day-to-day operations.
Article IV of your operating agreement will be short if you have a single-member managed LLC. This part should specify the member’s authority, that the member will administer the LLC, and that the member has the authority to sign contracts, open bank accounts, and bind the business in other ways. Include wording stating that the member’s responsibility is restricted to the extent permitted by law. Finally, as seen below, add boilerplate text for administrative concerns.
If you have a multi-member managed LLC, the management portion of the operating agreement should contain provisions outlining member responsibilities, member dispute resolution, and member accommodation when selling or otherwise transferring their stake in the business.
Include these terms before the management terms below if you select a member-managed structure and have numerous members:
- Management of the company: State that the company’s management is invested in the members. Also, explain that the members will select one chief executive member who will be in charge of the business’s operations and will have the greatest responsibilities.
- Members: Members’ liability is limited, and members have the authority to control, manage, lead, or operate the company’s activities, as well as to bind the business via contracts and other responsibilities.
- Members’ responsibilities: This section does not go into depth about each member’s responsibilities. Instead, it should specify that each member should have responsibilities and what will happen if they are not met.
- Chief executive member: A chief executive member is the person in charge of running your company’s operations and ensuring that member choices are implemented. If you have a single-member LLC, you may skip this step.
Manager-managed LLC
Only the managers and authorized officials of a manager-managed LLC have the power to bind the LLC. A manager may be a group of people with managerial power or a third-party hired to run the business. If you’d want to restrict management power to a subset of your members or if a non-member manager would benefit your company, choose this option.
Larger businesses should use the manager-managed structure, whereas single-member LLCs should use the member-managed structure. If you run a retail firm or another organization that will need employing individual store managers, a manager-managed single-member LLC may be a good option. Consider your company’s requirements and create a management structure that meets them.
The management part of your operating agreement will not be affected by the number of owners if you choose a manager-managed structure. Instead, the operating agreement should contain a section detailing the manager’s responsibilities.
Include these words before the management sections below if you select a manager-managed structure:
- Management of the business: Indicate that the LLC is managed by managers and that the managers are listed in the Articles of Organization you submitted with the secretary of state when you formed the LLC. Include information on how managers will be chosen. You may, for example, determine that members who own a majority of the LLC’s capital interests can pick management.
- Members: This section should indicate that unless members are chosen managers, they are not allowed to participate in the management of your company’s activities.
Article IV of the LLC Operating Agreement Template.
Article IV of the LLC Operating Agreement Template.
One of the most crucial aspects of starting a company is deciding on a management structure. Because the substance of your LLC operating agreement is determined by your management structure, it’s critical to choose the right one. Rocket Lawyer’s On Call lawyers can help you select a management structure for your LLC and write an operating agreement.
Go to Rocket Lawyer for more information.
Sections on Management Not Included
Whatever your management structure, you should include boilerplate language in Article IV to safeguard your LLC and its members against third-party legal action, bankruptcy, or regulatory action. In Article IV of your operating agreement, if you have a multi-member LLC, add language on indemnification, recordkeeping standards, and how members may access business documents.
The following parts should be included in your operating agreement:
- Members’ disputes: This section should indicate that member disputes will be resolved by a majority vote. If you have a multi-member LLC, just provide this.
- Powers: The member-managers or manager-managers of an LLC are described in this section. Include information on whether members/managers have the authority to engage into contracts, purchase real estate, take out loans, or otherwise bind the business. If you have a multi-member LLC, just provide this.
- Nominee: A nominee is a third-party public representative for an LLC who enables the LLC to own property while keeping it hidden from the public eye. This section specifies that ownership of the LLC’s assets shall be kept in the LLC’s name or in the name of a nominee, such as an attorney or title firm.
- Members of an LLC should have access to all books, documents, and materials pertaining to the LLC’s operations that are in the custody of a member or management. In Article IV of your operating agreement, include this section to explain members’ rights to view, examine, and copy these documents.
- Exculpation: An exculpation provision releases an LLC’s members or management from responsibility to its members for losses incurred as a result of acts done in good faith to advance the company’s best interests.
- Indemnification: This clause says that the LLC will pay members or third parties working on the company’s behalf for any damage, liabilities, or losses resulting from their good faith activities with regard to the business.
- Keep copies of your members’ names, your certificate of organization, your operational agreement, and your financial records. To decide how long to preserve records, check IRS rules or a CPA or tax attorney, and mention the time period in Article IV.
Choosing the right management structure for your LLC may be a challenging task. We suggest that you hire an attorney to assist you in organizing your business. If you don’t want to pay hourly legal costs, join up for Rocket Lawyer’s $39.99 monthly membership package, and their network of On Call lawyers will walk you through the procedure.
Go to Rocket Lawyer for more information.
7. Identify Your Officers (Article V)
Officers aren’t needed for your LLC. However, you may give your LLC structure by giving it names and outlining appropriate areas of activity. If your LLC has members or workers who will serve as leaders, utilize Article V of your operating agreement to spell out what they’ll do and how they’ll be chosen.
Article V of the LLC Operating Agreement Template.
If you desire officers, include wording in your LLC operating agreement that says:
- President: The president of your LLC must be a corporate management and will be in charge of the business’s high-level operations.
- Chief financial officer: The chief financial officer of your LLC will keep and maintain books and records of the LLC’s assets, liabilities, revenues, disbursements, profits and losses, as well as accounting of the LLC’s properties and business activities.
- Vice president: A vice president is a business owner, manager, or employee who is in charge of a particular area inside your firm, such as sales or finance.
- An LLC secretary’s tasks include drafting and submitting annual reports, taking meeting minutes, and other record-keeping duties.
Article V of the LLC Operating Agreement Template.
Include sections in Article V regarding general responsibilities, how officers will be chosen, the degree of their decision-making power, how they will be paid, and how the LLC will fill vacant officer seats, in addition to defining each of the functions. You should also include an exhibit to the operating agreement that specifies each officer’s name and position at the moment the agreement is signed.
Exhibit 3: Screenshot of LLC Operating Agreement Template
8. Define the Compensation Structure under Article VI.
The pay structure of an LLC affects how much managers are paid and how members may access their ownership stake. Use Article VI of your operating agreement to specify when and how managers will be paid for their services. You don’t required to limit member drawings, but you should always provide information about management pay.
Fee for Management
LLC managers are usually paid for time spent performing LLC management duties as well as reimbursed for out-of-pocket costs connected to LLC management. Include language in Article VI of your operating agreement that restricts payment to reimbursement and remuneration commensurate with the value of management services if you want to regulate how your LLC’s managers are paid.
Compensation for Members
LLC members have a capital account instead of getting paid for their labor in the business. They may, however, choose to receive a “draw” of money from their capital account in addition to receiving dividends. Include wording in your operating agreement that specifies when and how you may make withdrawals.
Article VI of the LLC Operating Agreement Template.
9. Describe Bookkeeping Practices in Article VII
To comply with state and federal tax laws, your LLC should keep comprehensive financial records. You’ll also need to keep track of capital contributions and member accounts if you’re a multi-member LLC. Choose a fiscal year and explain how to create and manage your books and monitor member accounts in Article VII of your operating agreement.
Ensure that the company’s books are kept up to date.
The books of a limited liability company are used to keep track of the business’s day-to-day operations and to produce balance sheets and other financial statements. To monitor revenue, expenditures, loans, and other debt, keep detailed records in your company’s ledger. Include broad wording in your operating agreement requiring members or managers to keep accurate and comprehensive records.
Accounts of Members may be tracked.
You should also keep track of the capital account and dividends for each member. Federal laws govern the bookkeeping requirements for member accounts, so consult them to verify you’ve included all of the essential information in your operating agreement. These terms will assist your LLC comply with tax regulations and also prepare you in the event that the LLC is sold.
Annual Reports to Prepare
Your LLC must also produce statements of each member’s share of earnings and losses after each fiscal year ends and give them to them for their individual tax returns. Include a section in your operating agreement outlining these obligations to ensure that your members and/or management are aware of the reporting responsibilities.
Establish a Fiscal Year
An LLC’s fiscal year, unlike a calendar year, is 12 months long and ends on the final day of any month. For accounting reasons, this date defines when your year finishes. Choose a fiscal year that works for you, but keep in mind that you’ll have to stick to it every year, and changing it may be tough.
Article VII of the LLC Operating Agreement Template.
10. Establish Transfer Procedures (Article VIII)
Under the event of a member buyout or the company’s dissolution, your operating agreement should contain processes for transferring shares in Article VIII. Members sell their ownership shares in buyouts, while an LLC dissolves when it ceases to operate. By defining processes in your agreement, you may control how membership shares are handled in certain circumstances.
Describe how shares will be allocated from a leaving member, how an exiting member’s interest will be valued for the purpose of a transfer, and how the member’s interest will be divided and paid in Article VIII of your operating agreement. Much of this is boilerplate, but it’s essential to specify how long members have to buy out a departing member’s stake and what happens to a former member’s obligations if the business is dissolved.
Article VIII of the LLC Operating Agreement Template.
11. Complete the document and meet the filing deadlines
Every member of your LLC must sign an operating agreement to make it a legally enforceable contract between members and/or management. Provide copies to each member and manager once they’ve signed, and keep the original on file at your main office. If you have any questions about particular filing or recordkeeping obligations, contact your secretary of state.
Certificate of Formation for LLC Operating Agreement Template (screenshot).
The process of drafting and signing an LLC operating agreement may be very complex, and it’s critical to do it right the first time. In addition to assisting you in drafting an agreement for your business, Rocket Lawyer’s On Call network of lawyers can assist you in ensuring that your LLC papers are legally enforceable.
Go to Rocket Lawyer for more information.
How Does an Operating Agreement for a Limited Liability Company Work?
An LLC’s operating agreement is a legal contract between its members and its management. LLCs benefit from operating agreements since they formalize ownership shares, profit-sharing, voting rights, and other aspects of the company. It becomes a legally enforceable contract outlining how the LLC shall function after it is signed by all of the LLC’s members.
Defining key terms of your LLC’s operation can help it survive if there are any disagreements or if a member decides to quit. An LLC operating agreement also allows businesses to escape the default regulations that states apply to businesses that don’t have one on file. Include all pertinent information in your operating agreement so that you can quickly locate it in the event of an issue.
For Whom Is It Appropriate?
Operating agreements are ideal for multi-member LLCs or LLCs with workers in the absence of state regulations. If you don’t have an operating agreement on file, your LLC will be subject to default state laws, therefore we suggest that every LLC have one. When drafting significant legal papers, it’s preferable to employ an attorney, but you may save money by utilizing our templates to create a basic LLC operating agreement for your business.
Although some states do not need LLCs to officially file operating agreements with the state, others must. Even though your state does not need an agreement, it is an excellent method for any LLC to codify its activities. Whether you’re not sure if you need an operating agreement, check with your secretary of state.
“Issues with third parties are inevitable in business; disputes arise, and you must deal with them.” When a company implodes from the center, it rips it apart. An operational agreement may shield you against another member ruining your company if members are battling over profit sharing agreements or other important issues.” — Trembly Law Firm’s Brett Trembly
The Benefits and Drawbacks of Using an Operating Agreement
An operating agreement for your LLC has both advantages and disadvantages. Because you aren’t obliged to file an agreement in every state, consider if the additional expenses of writing one are worthwhile. Execute an operating agreement if you have the time and resources to codify key aspects of your company and avoid state-specific default regulations.
Advantages of Using a Business Operating Agreement
The following are some of the advantages of adopting an operating agreement:
- Reduce management conflicts: When an LLC has more than one member or manager, it’s critical to spell out voting rights straight away. Voting rights and the extent of management power may be included in an operating agreement to achieve this.
- Avoid default state laws: In the absence of an operating agreement, every state has default laws that govern how LLCs function. To avoid these default laws and the uncertainty that comes with them, file an operating agreement.
- Quickly settle disputes: Operating agreements are an excellent approach to define your preferred conflict resolution procedures. Decide on a method for resolving intercompany conflicts and incorporate it in the contract.
- Prepare for the possibility of dissolution: If a member dies or chooses to leave the LLC, ownership percentages will have to be redistributed. To avoid an unwelcome LLC dissolution, specify how this will be accomplished in your operating agreement.
The Disadvantages of Using an Operating Agreement
The following are some of the disadvantages of adopting an operating agreement:
- An operating agreement may be costly to write if you hire an attorney to do so. Use one of our free LLC operating agreement templates to avoid these extra expenses and give your business structure.
- Time-consuming: Before you draft an operating agreement, you must determine how you want certain business decisions to be made. This may require time and effort that you may not have available when you initially set up your LLC.
- Restrictive: Depending on the conditions of your LLC’s operating agreement, you may discover that fulfilling criteria, for example, limits your capacity to function effectively.
Examples of LLC Operating Agreements
The shape and substance of an LLC operating agreement are determined by the LLC’s structure and current stage of operation. Follow a standard structure to ensure your agreement is thorough and clear, in addition to verifying with your state’s standards. Create an agreement that fits your LLC’s requirements with our easy LLC operating agreement templates.
Single-member LLC Operating Agreement Example
Single-member LLC operating agreements help to legally remove the member from the LLC and override state default regulations. They’re also a great method to define a third-party manager’s responsibilities and pay. Choose the right language for your management organization and use this template for your single-member LLC.
Here’s an example of a basic single-member LLC operating agreement:
Screenshot of the Operating Agreement for a Single-Member LLC.
Multi-member LLC Operating Agreement Example
Many of the provisions in a multi-member LLC’s operating agreement are the same as in a single-member LLC’s operating agreement, such as main location of business and registered agent. This template, however, is more comprehensive than the single-member template since it aims to make member interactions more predictable.
Below is a copy of our multi-member LLC operating agreement:
Screenshot of the Operating Agreement for a Multi-Member LLC.
Most Commonly Asked Questions
What Is an Operating Agreement for a Limited Liability Company (LLC)?
An LLC operating agreement is a legal contract between the members of the LLC, as well as between the members and the management. It specifies the scope of the LLC and the manner in which it will be run. An LLC operating agreement usually specifies how earnings will be shared, voting rights, and how the business will be dissolved.
Is an Operating Agreement Required for an LLC?
An LLC is not required to file an operating agreement with the secretary of state in any state. Some states, however, require LLCs to maintain a written agreement on file. Furthermore, in the absence of an agreement, states establish default regulations for LLCs. To provide your business structure and eliminate the unpredictability of default regulations, draft an operating agreement.
Is an Operating Agreement Required for a Single-Owner LLC?
LLCs with numerous members or workers benefit the most from operating agreements. Single-member LLCs, on the other hand, should have an operating agreement in place to distinguish the owner from the company for tax reasons and to avoid state default laws. Take a look at our LLC operating agreement templates to start drafting one for your small company.
What’s the Difference Between an Operating Agreement and Organizational Articles?
The articles of organization are the documents that your LLC files with the secretary of state to form it. The name of the LLC, its business objective, and its owners are all included in this document, which varies by state. An operating agreement, on the other hand, is written after your LLC is established and describes the structure and administration of your business.
Final Thoughts
Although LLC operating agreements are not needed in all states, they are a great method to codify your LLC’s structure and avoid the uncertainty of state-specific default regulations. Depending on the ownership and management structure of your LLC, the substance of your operating agreement will vary. Determine your company’s requirements and choose an LLC operating agreement template that meets them.
Because LLC operating agreements are complex, state-specific contracts, we suggest drafting one with the help of an attorney. Attorneys, on the other hand, may be costly, and certain businesses, such as single-member LLCs, need simpler operating agreements. If you don’t want to hire an attorney, Rocket Lawyer may assist you with your LLC operating agreement.
Go to Rocket Lawyer for more information.
The “one page operating agreement” is a business form that states the responsibilities of all parties involved. This document can be used as a template for your own business. It also includes free templates for you to use.
Related Tags
- single member llc operating agreement template free
- free operating agreement template word
- operating agreement for llc template
- multi member llc operating agreement template
- 50/50 llc operating agreement template
