Single-Member LLC Operating Agreement Template

A single-member LLC (SMLLC) is a company that has only one owner and is usually set up for tax planning and to separate the owner from the SMLLC’s assets and liabilities. Although a multi-member LLC is also an independent legal entity, it has two or more owners that share control of the company.

However, both single-member and multi-member LLCs benefit from similar LLC tax classifications. As both are classified as disregarded entities by the IRS, they do not have to file tax returns on behalf of the business unless they elect to be taxed as a corporation.

If you’re new to managing a single-member LLC, it can help to see a real example of an Operating Agreement before getting started on creating your own.

View our sample SMLLC Operating Agreement below to get a good idea of what your document should look like when completed.

It’s important to create this document to properly define how your company operates. A detailed single-member LLC Operating Agreement will:

• Protect your limited liability: This helps show that your business is a separate legal entity, which keeps you from being personally responsible for the company's debts or lawsuits.
• Get future funding: Lenders often want to see your business structure before they give you money.
• Set your own rules: This lets you decide how your business should run, rather than following the rules everyone else has to follow.

Additionally, if you're forming an LLC in California, Delaware, Maine, Missouri, or New York, you are always required to create an LLC Operating Agreement.

While a single-member LLC acts as a separate legal entity, a sole proprietorship offers no legal separation, leaving you personally responsible for all company liabilities.

Despite this difference, both share the same tax process. As "pass-through" entities, neither pays corporate income tax. Instead, you report all business income on your personal tax return to be taxed at your individual rate.

To draft your single-member LLC, you will need to include important details to ensure it properly protects your company. The following is what you should include in your article:

Information About Your Company

The first section should cover basic information about the company. It should include your company's name, the purpose of the company, and the date it was formed.

Choose a Registered Agent

List the individual who will be your registered agent in case of any legal issues with your company. This person must have an address in the state where your company is incorporated and be available during normal business hours to receive official correspondence on behalf of your company if necessary.

Ownership and Management of the LLC

Mention yourself as the sole member or any other managers if it is manager-managed and include their responsibilities and compensations. In this section, you should also set the rules for adding new members.

Capital Contributions

Describe the capital contributions that you and any other member will make to the company.

Additionally, outline how payment will be handled for any capital contributions.

Determine your Successors

Write up dissolution and succession instructions for closing down or transferring ownership of your business.

This might include instructions for selling off business assets or transferring ownership to someone else in the event of your death.

Governing Laws

Include a section stating which state laws your LLC will follow.

You should also include a venue selection clause, which states where any resulting litigation should take place if there are any disputes between members of the LLC.

Signing Your LLC

Make sure to sign and date the Operating Agreement to put it into effect.

Aside from filling your LLC’s Articles of Organization, there are 3 other documents you should also prepare:

• LLC Operating Agreement (Multi-member).
• Business Plan.
• Service Agreement.