LLC Operating Agreement Templates

An LLC Operating Agreement exists as a legal document that provides a company’s ownership structure as well as how it operates. It is used to create the business framework, to state members’ (business owners) rights and duties, and to ensure that the company functions effectively. The key components typically included in an LLC Operating Agreement are:

Organization: The details concerning the creation of the LLC will contain information such as the name of the business entity, primary business location, and the timing of its establishment.
Members: The LLC’s members are identified by name, address, and percentage of ownership. Additionally, there is an indication of what each member has contributed as cash, property, or service.
Management Structure: The LLC management can flow from two different angles – either by the members, in which case the management style will be referred to as member-managed, or by appointed managers, commonly referred to as manager-managed. It shows what members or managers do and the powers they possess.
Voting Rights and Decision-Making: Procedures on how decisions are made within the LLC this includes member’s voting rights, member’s voting way, and when it comes to a majority or super-majority vote.
Profit and Loss Distribution: The LLC’s profits and losses will be divided in accordance with the members’ ownership interests. This is usually explained in a document called “allocation of profits and losses” that all members must sign before they can join the LLC.
Meetings: A reference to hold meetings, including when they should happen the notice needed and how to do the meetings.
Membership Changes: A member may only sell or transfer their ownership interest to a third party if they meet one of the conditions set out by the operating agreement. The operating agreement will reflect the LLC’s policy on the departure and transfer of ownership if a member dies or resigns.
Dissolution and Winding Up: The terms in which the LLC may cease to exist and how it may be finally dissolved shall include the sharing out among creditors ahead of anything left to shareholders.
Dispute Resolution: Techniques of resolving disputes among the members, which may consist of methods like mediation or arbitration.
Amendments: It is necessary to have a clear and concise explanation of how to alter the operating agreements within a firm’s organization by ensuring that only authorized persons carry out this task alone.
Indemnification and Liability: Provisions for indemnifying members against certain liabilities and demarcating the extent of their personal liability for the debts of the LLC and its obligations.
Miscellaneous Provisions: Any additional clauses or provisions that the members deem necessary for the operation of the LLC.

A Limited Liability Company Operating Agreement is a legally binding document that sets out how the LLC will be run and helps avoid disputes between its members. Although not every state mandates this document, it is advisable to have it as it will safeguard the business and make it easy to run.