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A Single-Member LLC Operating Agreement establishes the legal framework for a business with one owner. It proves your company is a separate entity, which helps secure your personal liability protection and officially outlines your business operations.
Last Update April 21st, 2026
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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:
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.
| Single Member LLC | Sole Proprietorship |
|---|---|
| Allowed to have employees | No employees allowed without an EIN |
| Can act as a separate entity | Cannot act as a separate entity |
| Can open bank accounts | Can only create bank accounts using a Doing Business As (DBA) or under a personal name |
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:
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.
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.
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.
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.
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.
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.
Make sure to sign and date the Operating Agreement to put it into effect.
If you’re still wondering about some features that are in an SMLCC Operating Agreement, don’t panic. Find out even more about this kind of business legal document with our answers to some of the most frequently asked questions below.
Yes, a single-member LLC is able to hire employees and compensate them for their labor. However, the IRS and courts have ruled that single-member LLCs cannot have owners that are both employees and partners.
A single-member LLC can be a shield to protect your assets from any of the LLC’s liabilities. Although creating an SMLLC is more difficult than setting up a partnership or sole proprietorship, there are far fewer legal requirements when running an SMLLC in comparison to a corporation.
The IRS automatically sees a single-member LLC as a "disregarded entity." The business itself doesn't have to pay taxes. Instead, you use a Schedule C to report all of your profits and losses on your personal 1040 tax return.
If you have employees, you still have to pay regular payroll taxes. You can also choose to have your SMLLC taxed like a business.
A Single-Member LLC Operating Agreement has no expiration date. It remains legally valid **for the entire lifespan of your business **unless you formally dissolve the company.
You should, however, review and amend this document whenever significant structural changes occur to ensure your personal liability protection remains entirely secure.
