LLC Operating Agreement Template
Use our LLC operating agreement template to identify your business as a limited liability company and establish how it will operate.
Updated September 3, 2024
Written by Josh Sainsbury | Reviewed by Brooke Davis
An LLC operating agreement is a critical legal document that explains how a limited liability company will conduct its operations. It establishes rules for running the business, including decision-making protocols, member responsibilities, and profit distribution.
By State
By Type
Single Member LLC
This document governs the operations of an LLC with only one member (owner).
Multi Member LLC
This agreement is for LLCs with two or more members, each of whom holds a membership interest in the company.
- By State
- By Type
- What Is an LLC Operating Agreement?
- Do I Need an Operating Agreement for an LLC?
- What to Include LLC Operating Agreement
- LLC Operating Agreement Laws By State
- Amending an LLC Operating Agreement
- Sample LLC Operating Agreement
What Is an LLC Operating Agreement?
An LLC operating agreement outlines a limited liability company’s ownership and member duties. The agreement sets out the financial and working relations that suit the specific needs of the business owners.
It defines many crucial aspects of the LLC, including its day-to-day operations and procedures to follow if a member needs to leave the business. The owners should create one following the LLC’s formation to facilitate smooth business performance.
What Is an LLC?
A limited liability company (LLC) is a type of business structure that combines the liability benefits of a corporation with the tax benefits of a sole proprietorship or partnership.
LLCs minimize their members’ legal accountability, especially in case of litigation. They also protect the members’ assets from collection, creating a separate property from the LLC.
Do I Need an Operating Agreement for an LLC?
The only states that require an LLC operating agreement for LLC formation and maintenance are California, [1] Delaware, [2] Maine, [3] Missouri, [4] and New York. [5]
All other states don’t specifically require an operating agreement to create an LLC. Even though you technically don’t need an operating agreement in the other states, choosing not to have one can result in the following consequences:
- Fewer Legal Protections: Without an operating agreement, the LLC may be interpreted as a sole proprietorship or partnership. This classification could risk members’ personal assets in case of a lawsuit or debt. An operating agreement establishes the LLC as a separate legal entity, ensuring members receive protection from personal liability.
- Trouble with Finances: Many banks, lenders, and investors require an LLC operating agreement to open a business bank account, secure financing, or receive investment funds. Without this document, handling financial transactions, accessing capital, and proving the company’s credibility can be challenging.
- A Default to State Laws: In the absence of an operating agreement, your LLC will be subject to your state’s default rules, which may not reflect the members’ preferences. For example, suppose an agreement doesn’t specify what happens when a member dies. The state may automatically dissolve the LLC, which might not be what the members intended.
Furthermore, an LLC operating agreement can let you specify distributive shares or make special allocations. For example, you may establish that each member’s share of losses and profits is proportional to their ownership percentage (e.g., having 55% ownership in the LLC entitles you to 55% of the profits and losses).
On the other hand, you may make special allocations (e.g., you and your partner have 50/50 ownership, but you settle on an arrangement that lets you receive 70% of the profits while your partner receives 30%).
Do I Need a Joint Venture Agreement?
Most joint ventures established in the US are formed as LLCs for tax purposes. If you want to create your LLC as a joint venture, you might also need a joint venture agreement.
What to Include LLC Operating Agreement
Here are the essential elements to include in an LLC operating agreement:
- Party Details: List the names of all the members who form the LLC. Provide their full legal names instead of informal designations or nicknames.
- Company Name: State the name under which the company will operate and file its taxes. Ensure the name aligns with the requirements of your state’s business formation office.
- Date of Formation: List the date of the LLC’s formation.
- Principal Place of Business: Provide the LLC’s physical address.
- State of Operation: List the state(s) where the LLC is registered and operating.
- Business Purpose: Explain the purpose of the business and why only specific individuals are allowed to contract on behalf of the LLC.
- Registered Agent: Name the individual who can receive service of process or other correspondence on behalf of the LLC) and write their address.
- Statement of Liability: Explain how each member’s liability will be limited to the fullest extent permitted by law.
- Fiscal Year: List the company’s fiscal year (either the calendar year or a different timeframe that meets your needs).
- Tax Classification: Clarify whether the business will be classified as a partnership, C corporation, or S corporation for tax purposes. A partnership is usually the default, as the other statuses require the owners to meet specific requirements and file the appropriate election with the IRS.
- Membership Interests: Explain the ownership percentage each member has to determine their share of profits and losses. It often correlates with the member’s capital contributions.
- Classes: Divide membership interests into Class A Voting Capital and Class B Non-Voting Capital. You can also state whether the voting members can act (a) only collectively and unanimously, (b) with majority-in-interest, or (c) with 2/3-majority-in-interest.
- Ownership Interests: Outline the rights and obligations that come with LLC ownership.
- Transfer of Interests: Specify the requirements for transferring members’ interests and adding new members.
- Meeting and Voting Rights:
- Voting Rights: Clarify each member’s voting rights. Voting rights can be proportional to ownership interests or allocated differently.
- Quorum: Specify a quorum, which is the percentage of voting members that must be present at a meeting for the meeting’s actions to be valid. For instance, you may elect for there to be 50% for a quorum. Bob and Sue each own 10%. You don’t have a quorum if only Bob and Sue are present. Alternatively, Jay could hold 70%. In that case, Jay alone is a quorum.
- Delegation of Powers: Explain when members or managers can delegate authority to other members, managers, or third parties.
- Decision-Making: Specify how divisions will be made within the LLC, whether by the members’ majority vote or unanimous consent.
- Manager-Managed: Members designate a manager to handle the LLC’s day-to-day operations. Outline the manager’s duty to devote reasonable effort, time, and energy to managing the company in a manner that the members deem fair and appropriate.
- Member-Managed: All members participate in the LLC’s management and decision-making processes.
LLC Operating Agreement Laws By State
| State | Required by Law? | Law Governing LLC Operating Agreements |
| Alabama | No | Ala. Code § 10A-5A-1.08 |
| Alaska | No | Alaska Stat. § 10.50.095 |
| Arizona | No | Ariz. Rev. Stat. § 29-3105 |
| Arkansas | No | Ark. Code § 4-38-105 |
| California | Yes | Cal. Corp. Code § 17701.10 |
| Colorado | No | Colo. Code § 7-80-108 |
| Connecticut | No | Conn. Gen. Stat. § 34-243d |
| Delaware | Yes | Del. Code tit. 6 § 18-201 |
| Florida | No | Fla. Stat. § 605.0105 |
| Georgia | No | Ga. Code Title 14, Chapter 11 |
| Hawaii | No | Haw. Rev. Stat. § 428-103 |
| Idaho | No | Idaho Code § 30-25-105 |
| Illinois | No | 805 ILCS 180/ |
| Indiana | No | Ind. Code § 23-18-4-4 |
| Iowa | No | Iowa Code § 489.105 |
| Kansas | No | Kan. Stat. § 17-7672 |
| Kentucky | No | Ky. Rev. Stat. § 275.180 |
| Louisiana | No | La. Corporations and Associations § 12:1319 |
| Maine | Yes | Me. Stat. tit. 31 § 1521 |
| Maryland | No | Md. Code, Corp. & Ass'ns § 4A-402 |
| Massachusetts | No | Mass. Gen. Laws ch. 156C |
| Michigan | No | Mich. Comp. Laws § 450.4308 |
| Minnesota | No | Minn. Stat. § 322C.0110 |
| Mississippi | No | Miss. Code § 79-29-123 |
| Missouri | Yes | Mo. Rev. Stat. § 347.081 |
| Montana | No | Mont. Code § 35-8-109 |
| Nebraska | No | Neb. Rev. Stat. § 21-110 |
| Nevada | No | Nev. Rev. Stat. § 86.286 |
| New Hampshire | No | NH Rev. Stat. § 304-C:41 |
| New Jersey | No | NJ Stat. § 42:2C-11 |
| New Mexico | No | NM Stat. § 53-19-19 |
| New York | Yes | NY Limited Liability Company Law § 417 |
| North Carolina | No | NC Gen. Stat. § 57D-2-30 |
| North Dakota | No | ND Cent. Code § 10-32.1-13 |
| Ohio | No | Ohio Rev. Code § 1706.08 |
| Oklahoma | No | Okla. Stat. tit. 18 § 2012.2 |
| Oregon | No | ORS § 63.057 |
| Pennsylvania | No | 15 Pa. C.S. § 8811 |
| Rhode Island | No | RI Gen. Laws § 7-16-22 |
| South Carolina | No | SC Code § 33-44-103 |
| South Dakota | No | SD Codified Law § 47-34A-103 |
| Tennessee | No | Tenn. Code § 48-206-101 |
| Texas | No | Tex. Bus. Orgs. Code § 101.052 |
| Utah | No | Utah Code § 48-3a-112 |
| Vermont | No | 11 V.S.A. § 4003 |
| Virginia | No | Va. Code § 13.1-1023 |
| Washington | No | Wash. Rev. Code § 25.15.018 |
| West Virginia | No | W. Va. Code § 31B-1-103 |
| Wisconsin | No | Wis. Stat. § 183.0105 |
| Wyoming | No | Wyo. Stat. § 17-29-110 |
| Show More Show Less |
Amending an LLC Operating Agreement
Amendment to an LLC Operating Agreement
Lets the owners modify or remove certain sections of the original LLC operating agreement or propose new additions.
Download a free LLC operating agreement template in PDF or Word format below:
View Sources
Legal Templates uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial guidelines to learn more about how we keep our content accurate, reliable and trustworthy.
- Cal. Corp. Code § 17701.13. https://casetext.com/statute/california-codes/california-corporations-code/title-26-california-revised-uniform-limited-liability-company-act/article-1-general-provisions/section-1770113-office-agent-for-service-of-process-records
- Del. Code tit. 6 § 18-201. https://delcode.delaware.gov/title6/c018/sc02/index.html#18-201
- Me. Stat. tit. 31 § 1531. https://www.mainelegislature.org/legis/statutes/31/title31sec1531.html
- Mo. Rev. Stat. § 347.081. https://revisor.mo.gov/main/OneSection.aspx?section=347.081&bid=18457
- NY Limited Liability Company Law § 417. https://www.nysenate.gov/legislation/laws/LLC/417
- Articles of Incorporation: Fill out this document to form an incorporated business (or "corporation").
- Partnership Agreement: A document detailing the terms of a partnership when two or more people share ownership.
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