Writing an LLC Operating Agreement

Note: Links to our free templates are at the bottom of this long guide.
Also note: This is not legal advice

Introduction

Forming an LLC is a crucial step for many businesses, but it’s also important to understand the legal documents that come with it - namely the LLC Operating Agreement. This document outlines the rights and responsibilities of all members of the LLC, establishes rules and regulations, defines how profits and losses will be shared, and even outlines how disputes between members are to be handled. It serves as a legally binding document should any disputes arise – making it vital that business owners take the time to understand its content before signing.

At Genie AI we understand just how important this document is – which is why we have developed an open-source legal template library for anyone who needs help in drafting or customizing high-quality LLC Operating Agreements. Our library utilises millions of datapoints so that our AI can figure out what comprises a market-standard agreement, enabling us to provide users with step-by-step guidance in creating their own agreements without having to consult a lawyer.

Since our library launched in 2017, countless people have taken advantage of this free resource to ensure they get their agreements right first time around - no hassle or costly litigation required! And because these documents are ‘living’ documents which require regular updating, you can rest assured knowing your agreement will remain valid when changes occur in your business or amongst its members.

If you want access to our template library today and find out more about creating your own LLC Operating Agreement then read on below!

Definitions

LLC (limited liability company): A business structure that provides limited personal liability for its owners. This means that if the LLC is sued or incurs debt, the members are not personally responsible for the debts or liabilities of the LLC.
Pass-through taxation: A taxation system where the LLC does not pay income tax on its profits, but rather, the profits are passed on to the members and taxed at their individual income tax rate.
Registered agent: A person or business appointed by the LLC to receive legal documents, such as service of process, on behalf of the LLC.
Principal place of business: The address designated by the LLC as its primary location.
EIN (Employer Identification Number): A number used to identify the LLC and is required for the LLC to open a bank account and file taxes.
Articles of Organization: A document that outlines the basic information about the LLC, such as the name, address, and purpose of the LLC.
Licenses and permits: Documents issued by the government that allow the LLC to legally conduct business in a given state.
Operating agreement: A document that outlines the roles and responsibilities of the members, the management structure, the profit and loss distribution, the voting rights, and the rules for meetings and decisions.
Dispute resolution: A process used to resolve disputes between members, such as through arbitration or mediation.

Contents

1. Overview of LLCs and their benefits
2. How to Choose the Right State to Form Your LLC
3. Research state laws and requirements
4. Consider the state’s taxes and fees
5. Consider the state’s requirements for LLCs
6. How to Choose a Name for Your LLC
7. Check for availability
8. Choose a unique name that is not already in use
9. Consider the acronym when choosing a name
10. Ensure the name is legally compliant
11. How to Register Your LLC
12. Gather the required documents
13. File Articles of Organization
14. Apply for an EIN
15. Obtain the required licenses and permits
16. What to Include in the Operating Agreement
17. Names of members
18. Management structure
19. Profit and loss distribution
20. Voting rights
21. Rules for meetings and decisions
22. What Are the Advantages of an LLC Operating Agreement?
23. Clarifies ownership of the LLC
24. Provides clear guidelines for decision-making
25. Establishes procedures for dispute resolution
26. Helps maintain the LLC’s limited liability
27. What Should Be Avoided When Writing an LLC Operating Agreement?
28. Vague language
29. Outdated information
30. Unclear rules or regulations
31. Unreasonable restrictions
32. What Are the Best Practices for Writing an LLC Operating Agreement?
33. Seek professional legal advice
34. Be aware of applicable state laws
35. Use clear, concise language
36. Include provisions for dispute resolution
37. What Are the Steps to Finalizing Your LLC Operating Agreement?
38. Draft the agreement
39. Have all members review and sign the agreement
40. Notarize the agreement
41. File the agreement with the Secretary of State
42. How to Maintain Your LLC Operating Agreement
43. Review the agreement regularly
44. Update the agreement as needed
45. Ensure the agreement remains in compliance with state laws

Get started

Overview of LLCs and their benefits

• Understand the advantages of forming an LLC, such as limited liability protection, pass-through taxation, and greater flexibility in management structure
• Research and compare different states’ LLC statutes to determine which state will best meet your LLC’s specific needs
• Know the different types of LLCs, such as single-member LLCs, multi-member LLCs, professional LLCs, and series LLCs
• When you have an understanding of what an LLC is and have chosen the right state for your LLC, you can check this off your list and move on to the next step.

How to Choose the Right State to Form Your LLC

• Research the different states that have LLC formation laws
• Consider factors such as taxes, business regulations, and legal protections
• Examine the costs associated with forming an LLC in each state
• Decide which state is best suited to the business and its goals
• Check to make sure the state allows foreign LLCs
• When all research is done, choose the state that will provide the most legal protection and financial advantages to the LLC
  Once you have completed all the research and have chosen the state that best suits the LLC’s needs, you can check this off your list and move on to the next step.

Research state laws and requirements

• Review the requirements for forming an LLC in the state you have chosen
• Read through the state’s LLC laws and regulations to ensure compliance
• Check for any local or county regulations that may need to be considered
• Make a list of any state-specific requirements that must be included in the LLC’s operating agreement
• When you have a good understanding of the state’s LLC laws and have a plan for meeting them, you can check this step off your list and move on to the next.

Consider the state’s taxes and fees

• Determine the type of taxes your LLC will be liable for in your state
• Calculate the estimated taxes and fees that you will need to pay to the state
• Research and understand the tax requirements that apply to your LLC
• Ensure that you are aware of any payment deadlines
• Make sure that you are prepared to make these payments on time
• Once you have a full understanding of the taxes and fees associated with your LLC, you can move on to the next step.

Consider the state’s requirements for LLCs

• Research the laws that govern LLCs in your state
• Check whether an LLC operating agreement is legally required in your state
• Check what information must be included in the operating agreement per state law
• Make sure to include all required information in the operating agreement
• When all the required information is included in the operating agreement, you can check this off your list and move on to the next step.

How to Choose a Name for Your LLC

• Brainstorm ideas for your LLC name and decide on one that reflects your company’s purpose
• Research the rules and regulations of the state you are forming your LLC in to see if any naming requirements must be met
• Make sure the name you choose isn’t already in use by another LLC by searching the state’s business registry
• Consider the domain name of your LLC and if it is available for use for your website
• When you have decided on a name and confirmed it is available, you can check this step off your list and move on to the next step.

Check for availability

• Search the database of the Secretary of State’s website for the state in which you want to form the LLC
• Check the database to determine if the name you choose is available and not already in use
• If the name is available, you can proceed with forming the LLC
• If the name is not available, you must select another name and repeat the process
• When you have found an available name, you can move on to the next step

Choose a unique name that is not already in use

• Brainstorm names that reflect the LLC’s purpose and activities
• Research the business name to make sure it is not already in use by another business
• Check with your state’s Secretary of State website to make sure the name is available
• Once you have a unique name, you can move onto the next step: considering the acronym when choosing a name.

Consider the acronym when choosing a name

• Research the acronym of your LLC to ensure that it is not already in use.
• If the acronym is already in use, you will need to choose a different name.
• Look up the acronym in the state business registry to ensure that it is not already taken.
• Once you have confirmed that the acronym is available, you can move on to the next step of ensuring the name is legally compliant.

Ensure the name is legally compliant

• Research the restrictions and requirements in your state for naming an LLC
• Make sure your LLC name is not already taken by checking with your state’s secretary of state website
• Make sure your LLC name meets the requirements of your state, such as not having any restricted words like Bank
• Make sure the LLC name you have chosen isn’t already trademarked by checking with the USPTO website
• Once you have confirmed that your LLC name is available and compliant with your state’s requirements, you can move forward with registering your LLC.

How to Register Your LLC

• Choose a state to register your LLC in
• Submit the Articles of Organization with the state, which contains information about the LLC
• Submit the filing fee which is usually around $100
• Receive the LLC’s certificate of formation and the state’s approval of the LLC
• Check with the state to make sure your LLC was properly registered
• Once you have the LLC’s certificate of formation and the state’s approval, you can move onto the next step in the guide.

Gather the required documents

• Obtain the LLC’s name, mailing address, and registered agent’s address
• Gather the name, address, and signature of each member of the LLC
• Get the company’s purpose, capital contributions, and division of profits and losses
• Figure out the LLC’s management structure and voting rights
• Consider additional provisions that should be included
• When all of the necessary information is collected, you’re ready to move on to the next step.

File Articles of Organization

• Obtain the articles of organization form from the Secretary of State’s website
• Complete the form with the required information, such as the LLC name, purpose, address, and duration
• Submit the form, along with the necessary filing fee, to the Secretary of State for approval
• After approval, you will receive a certificate of organization from the Secretary of State
• You can check this off your list when you have the certificate of organization in hand.

Apply for an EIN

• Visit the IRS website and apply for an Employer Identification Number (EIN) for your LLC.
• This can be done online or by submitting Form SS-4 to the IRS.
• Once you have your EIN, you can use it to open a business bank account and apply for licenses and permits.
• You will know you have successfully completed this step when you receive your EIN from the IRS.

Obtain the required licenses and permits

• Contact your local city or county office to determine what licenses and permits are required for your LLC
• If applicable, contact the state office to determine what licenses and permits are required for your LLC
• Submit the necessary paperwork to obtain the required licenses and permits
• Pay any applicable fees associated with obtaining the licenses and permits
• Once all of the necessary paperwork has been submitted and all applicable fees have been paid, you can check this step off your list and move on to the next step.

What to Include in the Operating Agreement

• List the names of the members that will be included in the Operating Agreement
• Specify the percentage of ownership of each member
• Describe the management structure of the LLC
• Set forth the voting rights of each member
• Outline the duties and responsibilities of each member
• Describe the procedures for admitting new members
• Set forth rules for making decisions and taking action
• Detail the procedures for making distributions of profits and losses
• Describe the procedures for dissolution of the LLC
• List the governing law of the LLC
• Determine the tax treatment of the LLC
• Specify the terms of the Operating Agreement

You will know you have completed this step when all the items from the list above have been included in the Operating Agreement and it is ready for all members to sign.

Names of members

• Identify all members of the LLC, including names and contact information
• Assign a percentage to each member that reflects their ownership of the LLC
• State that members can transfer their interests to other members or to outside parties, and provide details on how to do so
• Confirm that no member can transfer more than 50% of their interest without the consent of the other members
• Include any other details about the transfer of members’ interests that the LLC agrees upon
• Checklist item complete: When all the members of the LLC have been identified, and each has been assigned a percentage of ownership, you can move on to the next step.

Management structure

• Decide how the LLC will be managed, either by member(s) or by a manager
• If managed by manager(s) determine who will be appointed manager(s)
• If managed by member(s) specify which members will have authority to make decisions on behalf of the LLC
• Outline the duties and responsibilities of each manager
• Establish the management structure, i.e. how decisions will be made, how often and what type of meetings must be held
• Establish the voting rules for LLC decisions
• Specify the liability of the LLC’s managers

When you can check this off your list and move on to the next step:

• When you have outlined all the rules for management structure and established the voting rules for LLC decisions.

Profit and loss distribution

• Decide how profits and losses will be shared among LLC members.
• Consider the contributions of members in terms of capital, services, or other input when determining the split of profits and losses.
• Outline the LLC’s fiscal year in terms of when it begins and ends and how often financial statements must be issued.
• Establish the order in which distributions of profits and losses will be made.
• Agree on how the LLC will handle any remaining profits or losses after distributions are made.
• Include language in the Operating Agreement that specifies how profits and losses will be distributed.
• When you have completed this step, double check that the Operating Agreement includes all necessary language for profit and loss distribution.

Voting rights

• Decide the number of votes each member of the LLC receives
• Set the voting rights for each of the LLC’s members based on the number of votes each member receives
• Specify whether a unanimous or simple majority vote is required for important decisions
• Outline a procedure for how votes will be cast and recorded
• Once the voting rights have been established, you can check this step off your list and move on to the next step.

Rules for meetings and decisions

• Establish the LLC’s decision-making process: Will decisions be made by unanimous agreement or majority vote?
• Set a quorum for meetings: How many members or managers need to be present to make decisions?
• Create rules for holding meetings: How will meetings be scheduled, and how will members be notified?
• Describe the process for voting: Will members or managers vote in person, by mail-in ballots, or by proxy?
• Outline the process for making decisions: Do members or managers need to be present to make decisions, or can decisions be made remotely?

Once you’ve established rules for meetings and decisions, you can check this off your list and move on to the next step: What are the advantages of an LLC Operating Agreement?

What Are the Advantages of an LLC Operating Agreement?

• Identify the benefits of having an LLC Operating Agreement
• Understand why it’s important to have an Operating Agreement and how it will help protect your LLC
• Research the specific laws and regulations that apply in your state and any other applicable laws
• Understand the tax implications of having an Operating Agreement
• Check if any other formal documents are needed to establish the LLC in your state
• You will know you have completed this step when you have thoroughly researched the advantages and implications of having an LLC Operating Agreement.

Clarifies ownership of the LLC

• Determine who are the members and their respective interest in the LLC
• Decide how the members will share profits and losses
• Identify who has the right to vote on LLC decisions
• Create a plan for what happens when a member leaves
• Set guidelines for transferring membership interests

You can check off this step from your list when you have written out all the details regarding the ownership of the LLC in the Operating Agreement.

Provides clear guidelines for decision-making

• Establish who has the authority to make decisions on behalf of the LLC
• List out specific topics on which the LLC members must vote to make decisions
• Outline the process for voting, such as the required vote majority, how votes are cast, and how to track votes
• Document the process for how the LLC will make decisions on topics not specifically mentioned
• Identify who will be responsible for day-to-day operations of the LLC

When you can check this off your list:

• When each of these items has been addressed in the Operating Agreement and all parties have signed off on the Agreement.

Establishes procedures for dispute resolution

• Outline the process for resolving disputes among members, managers, and other stakeholders
• Consider including a clause that requires disputes to go through mediation or arbitration before court proceedings
• Specify the process for selecting an arbitrator and the rules of arbitration
• Include a clause that states the governing law and jurisdiction in case of a dispute
• Determine the costs associated with dispute resolution and who will be responsible for them
• When you have completed this step, you will have established procedures for dispute resolution in the LLC Operating Agreement.

Helps maintain the LLC’s limited liability

• Include a provision in the operating agreement that explicitly states that the LLC is an entity separate from its members.
• Ensure that all members have limited liability protection by including language that states that members are not personally responsible for any of the LLC’s debts or liabilities.
• Mention in the document that the LLC is bound by the laws and regulations of the state in which it is formed.
• When you have included these provisions, you can check off this step and move on to the next.

What Should Be Avoided When Writing an LLC Operating Agreement?

• Refrain from using legally ambiguous language when drafting the operating agreement
• Make sure all provisions are clearly defined and easily understandable
• Avoid creating an operating agreement that conflicts with the LLC’s state laws
• Make sure to include all required aspects as determined by the state
• Do not use a generic template for the operating agreement
• Do not use language that is too specific to a certain LLC
• Do not include provisions that are not legally enforceable

When you have ensured that the operating agreement avoids all of the above issues, you can move on to the next step.

Vague language

• Read through the LLC Operating Agreement to make sure all language is specific, clear, and accurate
• Be sure the agreement does not contain ambiguous terms or phrases
• Utilize plain and unambiguous language to reduce potential for confusion
• When all language is clear and specific, you can be sure that the agreement will be enforceable
• Once all language has been reviewed and is specific, clear, and accurate, you can move on to the next step: Outdated information.

Outdated information

• Research the applicable laws governing LLCs in your state.
• Review the laws and regulations applicable to your LLC to ensure that the Operating Agreement you create is up to date.
• Update any outdated information in the Operating Agreement to ensure compliance with the current laws and regulations.
• Make sure that all language in the Operating Agreement is clear and unambiguous.
• Once you have updated the Operating Agreement and ensured that all language is current and clear, you can move on to the next step.

Unclear rules or regulations

• Research state laws and regulations that may apply to your LLC
• Make sure the rules and regulations are clear and up-to-date
• Consult with a lawyer or accountant to ensure you understand the rules and regulations
• Draft a section in your LLC Operating Agreement that outlines the rules and regulations that the LLC is subject to
• Include any relevant details, such as the state in which the LLC was formed
• Go through the document and make sure everything is clear and accurate
• When you have finished researching and writing the section, check it off your list and move on to the next step.

Unreasonable restrictions

• Make sure to avoid creating any unreasonable restrictions or limitations.
• Unreasonable restrictions could include anything that would limit members’ ability to conduct business or make decisions.
• Be aware of any laws or regulations that would prohibit certain restrictions.
• Once you’ve made sure that all restrictions are reasonable, you can move on to the next step.

What Are the Best Practices for Writing an LLC Operating Agreement?

• Research state laws and regulations for LLCs to understand the requirements for your LLC operating agreement
• Consult with legal professionals to ensure that the LLC operating agreement is legally sound and compliant with all applicable laws and regulations
• Include a comprehensive list of all members and their respective roles and responsibilities in the LLC operating agreement
• Clearly outline the voting rights of members and the decision-making process
• Specify the capital contribution of each member
• Outline the distribution of profits and losses
• Designate how the LLC will be managed, including the authority and responsibility of each member
• Include a dissolution procedure in the event of death or bankruptcy

When you can check this off your list and move on to the next step: When you have finished researching state laws, consulting with legal professionals, and including all of the necessary items in the LLC operating agreement.

Seek professional legal advice

• Consult with a lawyer experienced in business law to ensure the Operating Agreement is legally binding and complies with local, state and federal laws
• Ask the lawyer to review the document and make any changes to ensure it is comprehensive and comprehensive
• Obtain a signed copy of the Operating Agreement from the lawyer to keep on file
• Once you have received a signed copy of the Operating Agreement from the lawyer, you can be sure that it is legally binding and you can move on to the next step.

Be aware of applicable state laws

• Research the state laws applicable to your LLC
• Become familiar with the state’s requirements for LLCs
• Ensure that the Operating Agreement is compliant with the state laws
• Make sure that all of the necessary information is included in the Agreement to be compliant with the state laws
• Check that the Agreement complies with all of the relevant state regulations
• When you are confident that the Agreement meets all the state requirements, you can move on to the next step.

Use clear, concise language

• Review the LLC Operating Agreement for any vague language or lofty terms that need to be reworded
• Make sure to use simple and straightforward language to explain all provisions
• Ask a lawyer or legal expert to review the Operating Agreement to ensure all terms are clearly defined
• Once all provisions are explained in clear and concise language, the Operating Agreement is ready to be signed and executed.

Include provisions for dispute resolution

• List out what types of disputes can be resolved with the Operating Agreement.
• Outline the decision-making process and the resolution process for each dispute.
• Describe how disputes can be escalated if necessary and how the decision-making process will be applied.
• Include a clause for how to make changes to the Operating Agreement.
• Make sure to include language that allows the LLC members to agree to go to mediation or arbitration to resolve disputes.

Once you have included provisions for dispute resolution in your LLC Operating Agreement, you can check this off your list and move on to the next step.

What Are the Steps to Finalizing Your LLC Operating Agreement?

• Establish dispute resolution provisions – include the process for how disputes will be resolved and how the process will be enforced
• Ensure provisions are in accordance with state laws – consult with a lawyer to make sure all steps are in compliance with the LLC laws of your state
• Specify who will be responsible for resolving disputes – outline who will be in charge of resolving disputes and the timeline they must follow
• Finalize the agreement – get the agreement in writing and make sure all parties sign off on it
• You’ll know when you’ve completed this step when you have a finalized, signed agreement that meets the state’s LLC requirements.

Draft the agreement

• Research the legal requirements for LLCs in your state
• Decide how you will manage the LLC (e.g. member-managed or manager-managed)
• Determine the ownership stakes of each member
• Outline the voting procedures
• Describe how meetings will be conducted
• Decide how profits and losses will be distributed
• Establish how the LLC will be dissolved
• Set up rules for how changes can be made to the operating agreement
• Add any other provisions that are important for the LLC
• Draft the agreement using the information gathered
• Have the agreement reviewed by a lawyer to make sure it meets all legal requirements
• When you have a final draft, you are ready to move on to the next step - have all members review and sign the agreement.

Have all members review and sign the agreement

• Contact all members of the LLC and explain the purpose of the Operating Agreement.
• Provide each member with a copy of the Operating Agreement.
• Ask each member to review and sign the Operating Agreement.
• Make sure each member understands the terms of the Operating Agreement and that they are in agreement with them.
• Collect and store all signed copies of the Operating Agreement.
• You’ll know you can move on to the next step when all members have reviewed and signed the Operating Agreement.

Notarize the agreement

• Have each member of the LLC sign the operating agreement in the presence of a notary public
• The notary will provide you with a certificate verifying that the signatories were present when the agreement was signed
• The notary will provide you with a notarized copy of the agreement
• Once you have the notarized copy of the agreement, you can check this step off your list and move on to filing the agreement with the Secretary of State

File the agreement with the Secretary of State

• Obtain a copy of the Articles of Organization from the Secretary of State’s office.
• Fill out the document with the LLC’s name, purpose, and contact information.
• Include a copy of the LLC operating agreement with the filing.
• Pay the filing fee.
• Submit the paperwork to the Secretary of State’s office.
• You’ll receive a filing receipt when the document is accepted. This will serve as proof that the LLC operating agreement was successfully filed.

How to Maintain Your LLC Operating Agreement

• Make sure to review the LLC Operating Agreement every year or two to ensure it is still up-to-date
• Be aware of any changes in state and federal laws regarding LLCs that may require updates to the Operating Agreement
• Make sure to document any changes to the Operating Agreement and keep a record of the changes
• Have all members of the LLC sign any updates to the Operating Agreement
• When you have completed these steps, you can move on to the next step.

Review the agreement regularly

• Make sure to review the LLC Operating Agreement regularly, at least once a year.
• During the review, make sure all information is up to date and accurately reflects the current state of the business.
• It’s also important to note any changes in the governing laws and regulations that could affect the LLC Operating Agreement.
• After the review, consider any necessary changes and update the agreement as needed.
• Once you’ve reviewed the agreement and made necessary updates, you can check this off the list and move on to the next step.

Update the agreement as needed

• Monitor changes in state laws that apply to your LLC, such as any changes to the LLC structure, taxes, or filing requirements
• Keep track of any changes in the LLC’s ownership structure, such as the addition of new members
• Amend the operating agreement as needed to reflect any changes in the LLC’s structure, ownership, or state laws
• When the agreement is updated and all members have agreed to the amendments, have all the members sign off on the new version and keep the updated agreement in a safe place
• You will know that you have completed this step once you have made all necessary updates and all members have agreed to them.

Ensure the agreement remains in compliance with state laws

• Research the laws, regulations, and requirements in your state to ensure the agreement meets all legal standards.
• Include any provisions that are required by your state, such as the registered agent details, in the agreement.
• Make sure that all the clauses in the agreement are written in accordance with state laws.
• Seek legal counsel if you have any doubts about the legal requirements for your state.

You can check this off your list once you have ensured that everything in the agreement complies with the laws of your state.

FAQ

Q: What are the differences between US and UK LLC Operating Agreements?

Asked by Sarah on 26th April 2022.
A: US and UK LLC Operating Agreements are generally quite similar in terms of their purpose and function, but there are a few key differences. In the US, the LLC Operating Agreement typically governs how members can transfer ownership, how to make decisions, and how to dissolve the LLC. In the UK, an LLC Operating Agreement typically includes additional provisions such as what happens if a business is wound up and how to manage disputes between members. It’s important to be aware of the differences between these two jurisdictions when writing an LLC Operating Agreement.

Q: Are there specific provisions I need to include in my LLC Operating Agreement?

Asked by Jacob on 11th August 2022.
A: Yes, there are certain provisions that should be included in all LLC Operating Agreements, regardless of jurisdiction. These include information about the company’s name and purpose, its registered address, liability protection for members, voting rights for members, and how decisions will be made. Depending on the particular laws of your jurisdiction and the type of business you are operating, there may also be additional provisions that you should include in your LLC Operating Agreement.

Q: How does an LLC Operating Agreement differ from a Corporation’s Articles of Incorporation?

Asked by Emma on 21st December 2022.
A: An LLC Operating Agreement is a legal document that governs the internal management of a limited liability company (LLC), while a Corporation’s Articles of Incorporation is a legal document that sets forth the basic structure and purpose of a corporation. The main difference between these documents is that an LLC Operating Agreement lays out the rights and responsibilities of each member, while a Corporation’s Articles of Incorporation defines the structure of the corporation itself.

Q: Is it necessary to have an attorney write my LLC Operating Agreement?

Asked by Michael on 8th May 2022.
A: While it is not strictly necessary to have an attorney write your LLC Operating Agreement, it is highly recommended. An attorney can help ensure that your agreement is legally sound and follows all applicable laws in your jurisdiction. Additionally, they can provide valuable advice about any special provisions or clauses you may need in order to protect your interests as an owner or member of an LLC.

Q: What happens if I fail to include specific provisions in my LLC Operating Agreement?

Asked by Ashley on 17th October 2022.
A: If you fail to include specific provisions in your LLC Operating Agreement, you could be exposing yourself to costly disputes and liability issues down the line. Depending on the laws in your jurisdiction, certain provisions may be required for your agreement to be legally valid or enforceable. It’s important to consult with a knowledgeable attorney before signing any agreement just to make sure everything is in order.

Q: What other documents do I need for my LLC?

Asked by Joshua on 14th July 2022.
A: Depending on where you live and what kind of business you are operating, there may be other documents that you need for your LLC such as corporate bylaws or operating agreements with partners or shareholders. Additionally, many states require businesses to obtain certain licenses or permits in order to operate legally; these documents can vary depending on the type of business and should be obtained prior to forming an LLC.

Q: Can I change my LLC Operating Agreement after I have signed it?

Asked by Emily on 19th November 2022.
A: Yes, you can change your LLC Operating Agreement after it has been signed; however, it is important to note that any changes must be agreed upon by all members or owners involved in the agreement before they can take effect. If any member objects to changes being made to the agreement, then those changes cannot be enforced until all parties agree on them. Additionally, some changes may require approval from state or local authorities before they can take effect; it’s important to consult with an attorney before making any changes just to make sure everything is done legally and properly.

Example dispute

Suing a Limited Liability Company (LLC)

• Plaintiff must demonstrate that the LLC has breached the terms of the Operating Agreement which it signed and is bound by.
• Plaintiff must provide evidence that the LLC has acted in a manner that has caused harm to the plaintiff.
• Plaintiff must demonstrate that it is entitled to damages due to the breach of the Operating Agreement by the LLC.
• Plaintiff must provide evidence that the damages are the result of the breach of the Operating Agreement.
• Plaintiff must prove that the damages are reasonable and proportionate to the harm caused by the breach of the Operating Agreement.
• The court may order the LLC to pay the damages that the plaintiff has suffered as a result of the breach of the Operating Agreement.
• If the court finds in favour of the plaintiff, it may also order the LLC to pay the plaintiff’s legal fees.

Templates available (free to use)

Contract Operating Agreement
Ebt Operating Agreement
Joint Operating Agreement
Model Form Operating Agreement
Series Llc Operating Agreement

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