Even small businesses need detailed internal structures and strategies in order to run smoothly. Avoid it, and risk getting mired in money-draining inefficiencies — or worse. Being proactive by making sure your ship is in tip-top shape will set you on a good path.
What Is an LLC Operating Agreement?
An operating agreement is one of the key documents you’ll need to form your Limited Liability Company (LLC). It’s a legal document that outlines the rights and responsibilities of each member of your LLC and details the internal management and administrative aspects of the company. This includes:
- The rules of operation and management
- The roles and rights of each member
- How members will make decisions about the business
- How the LLC will handle any disagreements or disputes
To avoid misunderstandings and confusion that could derail your business’s success, an operating agreement is a critical document to have in place. So maybe you’re wondering, “Can I write my own operating agreement?” The answer is yes, absolutely. But it helps when you have access to an LLC operating agreement template — and Incfile has your back!
What Should an Operating Agreement Include?
Using our free template as your basis, you’ll want to gather all of the following information:
- LLC name
- Description and business purpose
- Company address
- Contact information for each member and Registered Agent
- Single or multi-member LLC
- Member meetings or other obligations
- Admission process for new members
- Capital contribution of each member
- Percentage of ownership for each member
- Share of profits and losses
- Management structure
- Voting and approval rights of each member
- Dispute resolution
- Communication between members
Do I Need a Business Operating Agreement?
The short answer is — yes. Still want the long answer?
Still yes, but with some technicalities. Operating agreements are only legally required in a handful of states, including California, Delaware, Maine, Missouri and New York.
While it isn’t required in all other states, it’s a recommended business practice. Why?
- An operating agreement will be needed in most states to open a bank account or apply for a loan.
- It helps multi-member LLCs navigate the decision-making process smoothly.
- It prevents misunderstandings and confusion by detailing how conflict will be handled before it arises.
- It lends credibility and legitimacy to your business.
So now we can probably guess your next question: “Is an operating agreement free?” It all depends. If you want an expert-crafted operating agreement that’s legally binding, you might want to use a paid service (with Incfile, it’s included in our Gold and Platinum packages). If you’re looking to DIY your operating agreement as efficiently as possible, you can use our free LLC operating agreement template.
Simplify Business Startup with Our Free LLC Operating Agreement Template
Getting ready to launch a single-member LLC or small partnership? Our operating agreement sample might be exactly what you need. Simply gather the information listed above, and plug it into the template.
However, for more complex situations or multi-member LLCs, it can be beneficial to seek expert support in drafting the agreement. Take a look at our Gold and Platinum business formation packages to get help filing your Articles of Organization and get your operating agreement included.
Download our LLC operating agreement template today, and if you need more support in navigating the legal ins and outs of forming and running your new business, browse all we have to offer in our Legal Template Library.
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