When you start a business or nonprofit, a common way to protect your personal assets is to form an LLC, which protects your personal assets by detaching them from the assets of the business.
A core document behind the formation of an LLC is the LLC Operating Agreement. An Operating Agreement protects your company's limited liability status by establishing the rules and provisions by which the internal operations of the LLC are handled. It acts like a contract between members and outlines their responsibilities and rights.
An LLC Operating Agreement is a legally-binding document between the members of an LLC that outlines all the functions and decisions of the business. Once signed, it establishes a legal obligation for the members to act in accordance with the rules and regulations provided.
Depending on your state, jurisdiction, or context, an LLC Operating Agreement may also be known as:
LLC Partnership Agreement
Ownership: The percentage of the company that each member owns
Capital Transactions: The sale of all or any part of the company's assets
Registered Agent: A business or individual that serves as the main point of contact between the LLC and your state
Anyone who wants to protect their assets and disentangle their liabilities from their business or nonprofit via an LLC can benefit from having an Operating Agreement. The agreement provides legal protection in a variety of situations and is highly recommended for LLCs with multiple partners.
If an LLC has several members, there may be some tacit agreement between them about how the business will operate. An Operating Agreement formalizes the roles, rights, and responsibilities of partners within an LLC and prevents confusion on how business arrangements should be handled.
Create your own documents by answering our easy-to-understand questionnaires to get exactly what you need out of your LLC Operating Agreement.
Each document on 360 Legal Forms is customized for your state.
All you have to do is fill out a simple questionnaire, print, and sign. No printer? No worries. You and other parties can even sign online.
Operating Agreements can have a lot of moving parts. The more protection you need, the more complex the Operational Agreement will be. With 360 Legal Forms, you get access to attorney-vetted legal forms that give you peace of mind.
The process is fast and easy. Our proprietary form generator can help you create your customized Operating Agreement in a few short minutes. We'll ask a handful of simple questions. Just fill in the requested information, and we'll put it together. You can see your document being created as you go through the questions.
Once completed, simply download your form as a PDF or Word document from your secure online account.
To create your document, please provide:
Name: The name of the LLC
State of Formation: Where the LLC was formed
Date of Formation: When the LLC was formed
Effective Date: Date the members are entering into the Operating Agreement
Personal Information of the Members: Name and address of the person or persons entering into the Operational Agreement
Name and Principal Place of Business: Name and address of the LLC
Tax Treatment: How the LLC chooses to be taxed (sole proprietorship, partnership, or S Corp)
Term: When and under what terms the LLC will be dissolved
Business Purpose: A statement about the nature of the LLC's business (often includes "and for any other lawful business purpose")
Member Capital Contributions: For multi-member LLCs, the Operating Agreement should reflect the capital amounts each member contributed
Every member of the LLC will have to sign the Operating Agreement for it to be valid. However, the Operating Agreement is not filed with the state. Instead, it's a private document between the members, and as such, each member should retain a signed copy.
After creating and signing your Operating Agreement with 360 Legal Forms, you can download and print as many copies as you like. As long as the copies are signed by all members, they do not need to be notarized. Keep a copy in your personal records.
An Operating Agreement is mandatory in California, Delaware, New York, Missouri, and Maine. Most states don't require the members of an LLC to sign an Operating Agreement, and in cases when it is a single-member LLC, it's not especially necessary. However, multi-member LLCs greatly benefit from removing ambiguity via an Operating Agreement.
The terms of an Operating Agreement can be changed at any point. You'll need to draft an Operating Agreement Amendment Form that details all the changes to the agreement. Every member has to sign the amendment form for it to be valid.
The members of an LLC can choose to be taxed under the same rules that apply to partnerships, but there are other options. While members of a partnership are liable for the debts and obligations of the partnership, the members of an LLC are only liable to the business up to their individual capital investment.
Yes. The Operating Agreement should establish under what conditions new members are admitted into the LLC. Typically, an Operating Agreement requires an affirmative vote from all members to issue interest in the LLC to a new member.
No. Most contracts are valid if signed without the presence of a witness. You may choose to have the Operating Agreement notarized to avoid specific bureaucratic obstacles, but it's not a requirement.
As a legally-binding document, the Operating Agreement should include enforceable sanctions for members who break the agreement. However, mediation and arbitration are generally preferable to civil actions if the goal is to preserve the LLC.