Free LLC Operating Agreement Template

The LLC operating agreement defines essential aspects of an LLC, including ownership, management structure, profit sharing, and procedures for resolving disputes. Although not required in all U.S. states, it is vital for ensuring the LLC runs smoothly.

Download our LLC operating agreement template below or sign up to customize your own agreement with our free tool.

Forming an LLC? Receive a complimentary operating agreement when you choose Northwest to establish an LLC for just $39 (plus state fees).

Create a Free LLC Operating Agreement

We provide a flexible operating agreement tool, along with templates tailored for single-member and multi-member LLCs. Our templates cover both member-managed and manager-managed structures, making it easy to create an agreement that fits your LLC’s specific needs.

Create a Tailored Operating Agreement

Generate a personalized operating agreement with our free tool. Simply answer a few basic questions, and our tool will create an operating agreement for your new LLC.

To use the tool, sign in to our Business Center. Creating a Business Center account also gives you access to various other free tools, exclusive discounts on business services, and much more.

Single-Member LLC Operating Agreement

Our single-member LLC operating agreement template PDF is designed for limited liability companies with just one member. In this setup, the sole member holds complete control over all LLC operations, and no other individuals have any ownership interest in the company.

Does My Business Need an Operating Agreement?

A written operating agreement provides essential protections, making it a vital document for any business.

Single-Member LLCs

As the sole owner of an LLC, drafting an operating agreement adds credibility to your business. It ensures that courts recognize and uphold the limited liability protection of your LLC, reinforcing the strength of your corporate veil.

Without such an agreement, a single-member LLC may resemble a sole proprietorship, putting your limited liability protection at risk.

Multi-Member LLCs

If you have business partners, an operating agreement is essential for preventing misunderstandings by clearly defining the roles and responsibilities of each partner. While it’s always advisable to have an operating agreement in place, it becomes even more critical when multiple partners or members are involved. This document is a key asset for ensuring future success.

State Requirements

Although an operating agreement is a crucial document, most states do not mandate businesses to have one, and none require it to be filed with state records. Even if your state doesn’t require an operating agreement, it’s highly recommended to create one.

The operating agreement serves as a reference in court and among members to resolve disputes or make key decisions. Without one, your LLC will default to the state’s standard rules.

The following states require all LLCs to have an operating agreement:

Maine
Missouri

	State Operating Agreement Statutes
Alabama	§ 10A-5A-1.08
Alaska	§ 10.50.095
Arizona	§ 29-3105
Arkansas	§ 4-38-105
California	§ 17701.11
Colorado	§ 7-80-108
Connecticut	§ 34-243d
Delaware	§ 18-101(9)
Florida	§ 605.0105
Georgia	§ 14-11-101(18)
Hawaii	§ 428-103
Idaho	§ 30-25-105
Illinois	ILCS 180/15.5
Indiana	§ 23-18-4-4
Iowa	§ 489.111
Kansas	§ 17-7672
Kentucky	§ 275.175
Louisiana	§ 1301(A)(16)
Maine	Title 31, § 1521 and § 1521(B)
Maryland	§ 4A-402
Massachusetts	Ch. 156C § 24
Michigan	§ 450.4102(r)
Minnesota	322C.0110
Mississippi	§ 79-29-105(t)
Missouri	§ 347.081
Montana	§ 35-8-109
Nebraska	§ 21-110
Nevada	§ 86.286
New Hampshire	§ 304-C40
New Jersey	§ 42:2C-11
New Mexico	§ 53-19-2(O)
New York	LLC § 417
North Carolina	§ 57D-2-30
North Dakota	§ 10-32.1-13
Ohio	§ 1706.08
Oklahoma	§ 2012.2
Oregon	§ 63.057
Pennsylvania	§ 8815
Rhode Island	§ 1706.08
South Carolina	§ 33-44-103
South Dakota	§ 47-34A-103
Tennessee	48-249-203
Texas	§ 101.052
Utah	§ 48-3a-112
Vermont	11 VSA § 4003
Virginia	§ 12.1-1023
Washington	§ 25.15.018
Washington D.C.	§ 29-801-07
West Virginia	§ 31B-1-103
Wisconsin	§ 183.0105
Wyoming	§ 17-29-110

What Is the Purpose of an LLC Operating Agreement?

Here are the core purposes of an LLC operating agreement:

1. Outlines Rules for the Business

An LLC operating agreement primarily serves to establish the foundational rules for managing your business. It functions as an internal guide, detailing your LLC’s governance structure and operational processes, offering a clear framework for overseeing your business activities.

2. Determines Profit and Loss Distribution

The agreement thoroughly outlines who the owners (known as members) of the LLC are, along with their individual ownership percentages and initial capital investments. This clarity in defining the ownership structure helps to prevent misunderstandings and minimizes the risk of disputes in the future.

3. Plans for Future Changes

A crucial element of the agreement is outlining how the LLC’s profits and losses will be distributed among its members. This provision enhances financial transparency, ensuring that each member understands their financial rights and obligations clearly.

4. Sets Dispute Resolution Methods

The agreement is crafted with a forward-looking approach, including provisions that anticipate shifts in membership, such as welcoming new members or managing the exit of current ones. This structure enables the business to adapt seamlessly to future changes, offering a clear and organized process for ownership transitions.

5. Strengthens Limited Liability Protection

Disputes and disagreements are common in any business. An operating agreement establishes procedures for handling these conflicts, which can help avoid excessive time, stress, and legal expenses.

6. Provides Credibility

The operating agreement serves to establish the LLC as a distinct legal business entity, enhancing its limited liability protection. This formal distinction adds an extra safeguard for members’ personal assets, shielding them from potential business debts or lawsuits. In the absence of an operating agreement, the LLC’s legal standing may be compromised, leaving members vulnerable to personal liability.

7. Facilitates Decision-Making

An operating agreement can also act as a mark of credibility for external stakeholders. Prospective investors, lenders, and partners typically view a well-structured operating agreement as an indication of professionalism and foresight, boosting your business’s reputation.

How to Write an LLC Operating Agreement

Although the sections in your operating agreement may differ according to your LLC’s specific requirements, there are six essential articles you should consider including.

Introduction

The introductory section of your LLC’s operating agreement should include the key foundational details about your business, such as:

The official name of your LLC
The effective date when the operating agreement takes effect
The state where your LLC is registered
The names of all members involved in the LLC

This section sets the groundwork for the rest of the agreement and provides important context for the document.

Article 1. Organization

The first article of your operating agreement should cover the foundational details of your company, such as the formation date, primary purpose, and ownership structure.

Single-Member LLCs

For single-member LLCs, the “Organization” article can specify that, as the sole owner, you are the only individual with rights in the LLC.

Additionally, as the sole member, you have the flexibility to amend your operating agreement at will, without needing a voting process.

Multi-Member LLCs

Ownership details in multi-member LLCs require more specificity. The operating agreement should outline each member’s number of LLC units and their respective percentage ownership.

For instance, if your LLC has four members with equal shares, each member would hold 25 LLC units, representing a 25% ownership stake in the company.

Article 2. Management and Voting

This article describes the management structure of your LLC, specifying whether it will be managed by its members or by a designated manager. It should also outline the voting process for key company decisions, such as admitting new members, raising capital, or dissolving the LLC.

Multi-Member LLCs

In multi-member LLCs, members must decide whether votes will be made by unanimous consent (i.e., all owners must agree) or by majority vote (either based on the number of members or LLC units).

This article should also specify that no member can take individual action on behalf of the LLC without the prior approval of all members.

Single-Member LLCs

In a single-member LLC, it is sufficient to state that all management responsibilities, voting decisions, and member authority rest solely with the single owner.

Article 3. Capital Contributions

For multi-member LLCs, if additional capital is to be raised, either by existing members or through the admission of new members, the operating agreement should specify whether these decisions will be made by majority vote or unanimous consent

Article 4. Distributions

The distributions article specifies how and when the LLC will distribute its profits, as well as how losses will be allocated.

For multi-member LLCs, profits and losses are typically distributed according to the LLC unit percentages held by each member.

In contrast, all profits and losses in a single-member LLC are allocated entirely to the sole owner.

Article 5. Membership Changes

Your LLC must establish the procedures for adding or removing members, as well as how member interest will be transferred, if applicable.

In a single-member LLC, the sole owner has the exclusive authority to approve the addition of a new member and determine how membership interest will be transferred.

(Note that once new members are added, a new operating agreement will need to be created to reflect the provisions of a multi-member LLC.)

Multi-member LLCs must specify the voting process for adding or removing members and transferring LLC units, detailing whether decisions will be made by majority vote or unanimous consent.

Article 6. Dissolution

This final article should explain what will happen if and when the LLC must be dissolved. If the LLC is only going to be active for a specified period of time, the end date or event would be noted here. Otherwise, the LLC is assumed to exist in perpetuity.

A multi-member LLC should list how voting for dissolution will occur and how members will distribute any remaining assets upon dissolution.

Execution

Once the operating agreement is finalized and all members have approved its contents, each member should sign and print their name, indicating their agreement on behalf of the company and as a member.

After Creating Your Operating Agreement

Once your operating agreement is complete, there is no need to file it with the state. You should keep it for your records and provide copies to the members of your LLC.

After significant events, such as adding or removing a member, it is advisable to review and potentially update the operating agreement.

Depending on the terms of your operating agreement, it may require approval from some or all members to amend the document.

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FAQ

How do you write a simple operating agreement?

To create a simple operating agreement, start by outlining the business's basic details, including each member and their ownership percentages, capital contributions, and the distribution of profits and losses. Include guidelines for membership changes, decision-making processes, dispute resolution methods, and finalize with signatures from all members.

Can the operating agreement provide details about company property?

The operating agreement provides details on the ownership and management of company property, a key part of company assets. It can set guidelines for the purchase, use, and sale of property, which helps to prevent potential disputes among members.

Can I create my own operating agreement for my LLC?

Yes, you can draft your own operating agreement for your LLC. However, it's essential to ensure the agreement is customized to fit your business’s unique needs and complies with state laws. We recommend reviewing a sample LLC operating agreement to understand the structure and key components before creating your own.

What is an operating agreement template for an LLC?

An LLC operating agreement template is a preformatted document that provides the basic framework for an operating agreement, allowing you to add your business-specific information. It typically includes sections for ownership, capital contributions, profit distribution, decision-making, and dispute resolution.

What are the key elements of an LLC operating agreement?

The key elements of an LLC operating agreement are: company details, member details with ownership percentages, capital contributions, distribution of profits and losses, rules for membership changes, decision-making processes, dispute resolution methods, and member signatures.

What is the difference between an LLC agreement and an operating agreement?

An LLC operating agreement has the following major elements: company information, member information and ownership percentages, capital contributions, profit and loss distribution, membership change rules, decision-making procedures, dispute resolution methods, and signatures from all members.

Is an operating agreement the same thing as the Articles of Organization?

The operating agreement acts as a comprehensive extension of the Articles of Organization. While the Articles of Organization, filed with the state, formally establish your LLC, they only include basic business information, such as the name, address, and members. They typically don’t address the operational and managerial details that the operating agreement covers.

Will an operating agreement protect company assets?

The operating agreement is crucial for safeguarding company assets. It specifies each member’s capital contribution to the LLC, which may include money, services, or property. The agreement also establishes guidelines on how these assets will be managed, utilized, and allocated among members, adding a layer of protection and clarity.

DISCLAIMER

The documents provided are “AS IS” and with “ALL FAULTS.” We disclaim all warranties, including but not limited to warranties of fitness for a particular purpose. These documents may not be suitable for your unique situation. By downloading them, you agree that they do not constitute legal advice, recommendations, mediation, or counseling and do not form an attorney-client relationship.

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