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Limited Liability Company (LLC) Operating Agreement
Establish clear rules and member responsibilities with this comprehensive LLC Operating Agreement Template.
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LLC Operating Agreement Template
This Operating Agreement (“Agreement”) is entered into on [Date] by and among the members listed below (collectively referred to as the “Members”) for the purpose of governing the operations of [LLC Name], a limited liability company organized under the laws of the State of [State] (the “Company”).
1. Company Formation
The Members hereby form a limited liability company pursuant to applicable state laws by filing Articles of Organization with the appropriate state agency.
2. Principal Office
The Company’s principal business office shall be located at:
[Address]
3. Purpose
The Company is organized to engage in any lawful business activity permitted under state law, including but not limited to [Describe Business Purpose].
4. Term
The Company shall continue until dissolved as provided herein or as required by law.
5. Members and Ownership Interests
The names, addresses, and ownership percentages of each Member are as follows:
[Member Name, Address, Ownership Percentage]
[Member Name, Address, Ownership Percentage]
6. Capital Contributions
Each Member has contributed the following capital to the Company:
[Member Name: Contribution Amount and Description]
7. Management Structure
☐ Member-Managed LLC: Each Member has equal rights in managing the Company’s business and affairs.
☐ Manager-Managed LLC: The Members appoint the following individual(s) as Manager(s) to oversee the Company’s operations:
[Manager Name, Address]
8. Voting Rights
Voting shall be based on each Member’s ownership percentage unless otherwise specified. Certain actions, such as admitting new Members or dissolving the Company, require unanimous consent.
9. Profits, Losses, and Distributions
Profits and losses shall be allocated to the Members in proportion to their ownership percentages.
Distributions shall be made at such times and in such amounts as determined by the Members or Managers.
10. Transfer of Membership Interests
No Member may transfer, sell, or assign their ownership interest without the consent of the other Members.
11. Books, Records, and Accounting
The Company shall maintain complete and accurate books and records at its principal office and shall use [Cash/Accrual] accounting method for tax and reporting purposes.
12. Dissolution
The Company may be dissolved upon the occurrence of any of the following:
A unanimous vote of the Members.
The sale or disposition of substantially all assets.
Any event requiring dissolution under state law.
Upon dissolution, the assets shall be liquidated and distributed in the following order:
Payment of Company debts and liabilities.
Return of capital contributions to Members.
Distribution of remaining assets according to ownership percentages.
13. Indemnification
The Company shall indemnify its Members and Managers against claims or liabilities arising from their service to the Company, to the fullest extent permitted by law.
14. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of the State of [State].
15. Amendments
This Agreement may be amended only by a written document signed by all Members.
16. Entire Agreement
This document represents the complete understanding of the Members and supersedes any prior agreements or discussions.
Signatures
Executed as of the date first written above:
Member Signature: ____________________________ Date: _________
Printed Name: _________________________________________
Member Signature: ____________________________ Date: _________
Printed Name: _________________________________________
Details
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Limited Liability Company (LLC) Operating Agreement
LLC OPERATING AGREEMENT FAQ
What is an LLC Operating Agreement?
An LLC Operating Agreement is a binding contract among the members of a limited liability company that sets forth the rules for management, ownership, profit distribution, and dispute resolution.
Why is an Operating Agreement important?
It protects members by clearly defining roles and responsibilities, reducing conflicts, and preserving limited liability status. Many states also require one to demonstrate proper business governance.
When should you create an Operating Agreement?
An Operating Agreement should be created as soon as the LLC is formed and before starting business operations or accepting new members.
What should an Operating Agreement include?
Key elements include member contributions, ownership percentages, management structure, voting rights, profit allocation, transfer restrictions, and dissolution procedures.
Is an Operating Agreement required by law?
Not in all states, but even where it isn’t mandatory, having one is strongly recommended to establish clear business rules and prevent legal disputes.
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