Free LLC Operating Agreement Template

An Operating Agreement for an LLC sets out a number of important rules for the running of a limited liability company. These vary state by state, but generally they cover numerous features of the business, such as:

• Ownership
• Company structure
• Member investments and duties
• How the business will be taxed
• How profits will be distributed

They also include information about many other factors, including:

• The binding authority of members and managers
• Decision-making structure
• Requirements for meetings and notices
• Member rights and obligations
• Procedures for allocating losses, admitting new members or removing members
• How to amend the agreement

Note: these lists are not limiting; remember that these documents contain many other specifications for running the LLC.

It is an essential legal document that should be completed, whether it is a single-member or multi-member limited liability company. It is an essential requirement in the following states:

• New York
• Maine
• Missouri
• Nebraska
• Delaware
• California

Make sure to check your state's requirements in case they have changed.

Even if it’s not a requirement of your state, having an Operating Agreement for an LLC can help answer questions about how a company is run. It does this by creating a detailed record of the business’s precise ownership, management structure.

It is highly recommended to have an Operating Agreement in order to avoid future ambiguity as well as to show that you are a true company, thereby mitigating the risk of a claimant piercing the corporate veil (and thereby accessing your personal assets if they win on judgment).

If you’re new to managing an LLC, it can help to see a real example of this document before getting started on creating your own. View our sample Operating Agreement below to get a good idea of what your document should look like when completed.

Starting an LLC is not a complicated process. It is a relatively simple form of business that offers more protection than a sole-owner or partnership company, and fewer complications and fewer formal annual duties than a corporation.

To start an LLC, you'll need to follow these steps:

• Decide which state's laws will apply: Each state has its own individual rules for setting up LLCs. This will normally be the state the business is being run from and will dictate the exact process of registering the company.
• Choose the name of your business: If you are already trading as a partnership or sole-proprietor company, you'll probably already have a name you can use. If not, you must decide on a name that you can use for the business. It should be easy to remember and must not already be registered by another company or trademarked.
• Decide on the registering agent: You, another Member of the business, or a third party (as required in some states) must be chosen to act on behalf of the LLC. They will be responsible for all official state communications and receiving any important notices, such as lawsuits. This will need to be recorded in the Articles of Organization you submit to your state and in your Operating Agreement documentation. Most states require that the registered agent reside in the state of formation. Also, the address used is usually publicly accessible, so be careful about using your home address.
• File the LLC Papers of organization: In this final step, you need to formally inform your state government that you are registering your LLC. This involves paying the application fees (around $80-$500, depending on the state you’re in) and submitting the articles of incorporation/articles of organization or the certificate of formation (an alternative term used in some states for the same founding document).

At this point, the operating agreement can be drafted and published. Normally your LLC has to be declared "active" in order for your completed company operating agreement to be valid.

Whilst it may seem a complicated legal document, writing an Operating Agreement does not need to be a difficult process.

If you want to draft your own, you can use the steps below as a guide:

You can easily create this document in a few minutes with our LLC Operating Agreement template. Simply enter your company's details, and you'll receive the finished document instantly.

There are a number of important considerations that company owners will need to feature in their LLC operating agreement. A completed document will normally include details of the following:

• How ownership is divided among the members of your business
• Membership rights
• The distribution of membership duties and responsibilities
• How profits will be allocated
• How a member can officially leave the business
• How the business can be closed down if necessary
• What form of taxation framework the business will be assessed under

However, at minimum, your completed company operating agreement needs to contain these key details:

• The names and signatures of all members of the LLC
• The capital contribution and interest percentages of each member
• The date of the annual meetings of the new LLC

The cost of maintaining an LLC usually includes annual or biennial state fees. This can include report filing fees or franchise taxes. These ongoing costs vary by state. Legally, you have to pay these fees.

In addition to these recurring fees, there are also one-time or setup-related costs you may need to pay when forming your LLC. Generally, these include the following: