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Operating Agreement
Clearly establish internal LLC management terms using this Operating Agreement Template.
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Operating Agreement
of [Company Name], LLC
This Operating Agreement ("Agreement") is entered into on [Date], by and among the Members listed below (collectively referred to as the "Members") of [Company Name], LLC, a limited liability company formed under the laws of the State of [State].
1. Formation
The Members hereby form a Limited Liability Company ("LLC") pursuant to the laws of the State of [State]. The name of the company shall be [Company Name], LLC.
2. Principal Office
The principal place of business shall be located at: [Business Address], or such other location as may be determined by the Members.
3. Purpose
The purpose of the LLC is to engage in [brief description of business activity], and any other lawful activities permitted under state law.
4. Term
The LLC shall continue until dissolved as provided in this Agreement.
5. Members and Ownership Interests
The initial Members and their ownership percentages are as follows:
[Member A Name] – [XX]%
[Member B Name] – [XX]%
(Additional members may be added per Section 13)
6. Capital Contributions
Each Member has contributed the following capital to the LLC:
[Member A Name] – $[Amount]
[Member B Name] – $[Amount]
No additional contributions are required unless agreed upon in writing.
7. Profits and Losses
Profits and losses shall be allocated among Members in proportion to their ownership interests.
8. Distributions
Distributions of available funds shall be made at the discretion of the Members, in accordance with ownership percentages.
9. Management
The LLC shall be [Member-managed / Manager-managed].
If Manager-managed: [Manager’s Name] shall serve as Manager with authority to operate the business.
10. Voting Rights
Decisions shall be made by a majority vote of the ownership interests unless otherwise specified.
11. Meetings
Meetings may be called by any Member upon reasonable notice. No formal meetings are required unless requested.
12. Accounting and Records
The LLC shall maintain complete and accurate financial records. The fiscal year shall end on [Month/Day].
13. Admission of New Members
New Members may be admitted only upon unanimous written consent of existing Members.
14. Withdrawal or Death of a Member
In the event of a Member’s withdrawal, death, or incapacity, the remaining Members may purchase that Member's interest per terms to be negotiated.
15. Dissolution
The LLC may be dissolved upon:
(a) Unanimous written consent of the Members,
(b) Sale of all assets,
(c) A legal requirement for dissolution.
Upon dissolution, assets will be liquidated and distributed in accordance with ownership interests after all liabilities are paid.
16. Governing Law
This Agreement shall be governed by the laws of the State of [State].
17. Entire Agreement
This Agreement represents the entire understanding between the Members and supersedes any prior oral or written agreements.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the date first above written.
Member A Signature
Name:
Member B Signature
Name:
(Attach additional signature lines as needed)
Details
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Operating Agreement
OPERATING AGREEMENT FAQ
What is an Operating Agreement?
An operating agreement is an internal legal document for a limited liability company (LLC) that outlines the company’s ownership structure, operational rules, profit and loss distribution, and management procedures. It serves as the governing framework for how the LLC will operate, covering both day-to-day processes and long-term decision-making.
Why do you need an Operating Agreement?
It clearly defines the roles, responsibilities, and rights of LLC members, reducing the potential for disputes. It also establishes procedures for decision-making, profit allocation, adding or removing members, and handling dissolution. In some states, an operating agreement is required by law, and even where it isn’t, it strengthens the company’s legal standing by demonstrating separation between the business and its members.
When should you use an Operating Agreement?
You should create an operating agreement as soon as you form your LLC—especially if it has multiple members. Even single-member LLCs benefit from having one, as it helps clarify business operations and maintain limited liability protections.
How to write an Operating Agreement?
Include details on membership structure, voting rights, capital contributions, profit and loss distribution, management roles, procedures for meetings and decision-making, rules for transferring ownership, and steps for dissolution. Ensure the document complies with your state’s LLC laws, and have all members sign to confirm their agreement.
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