Free Sample LLC Operating Agreement
Operating agreements are not mandatory in every state, but you should draft one to establish a cohesive management structure for your LLC.3 min read
2. Compensation Plan
3. Keeping Records
4. LLC Shares
You may find a free sample LLC operating agreement online. Operating agreements are not mandatory in every state, but you should draft one to establish a cohesive management structure for your LLC. Instead, the mandatory document to file is your articles of organization when you register your LLC with the secretary of state office.
Under an LLC, owners are afforded liability protections against creditors who wish to seize personal assets to satisfy business debts. In order to become member, an owner (or member) must contribute money, property, or services to the LLC in return for an ownership interest in the business.
Information pertaining to interests and memberships shares should be outlined in the operating agreement. Further, you should appoint a record-keeper in the agreement, and a person in this position can also divide profits in an equitable manner. You may assign other roles to such a position, or you may delegate accounting duties to another person in the LLC.
You may also hire a professional account for your business. Accounting methods may vary; some business keep records every three months, or others may until years to do so. The great thing is that you may establish your managerial structure and accounting methods how you see fit, but you must also ensure that all members are aware of the terms and operating procedures and agree to the operating agreement.
Naming your LLC
Before you come up with a name, you must search the online database to see if the name is already taken by another LLC. From there, you’ll choose the state you want to create your LLC. LLCs are not registered on a federal level. You would only need to apply federally when you obtain your Employer Identification Number (EIN).
Choose whether your business is the following:
- Single-member LLC (Owned by One Owner)
- Multi-member (Company with Multiple Owners)
Enter your LLC’s primary address, or “Principal Office Address.” After, list your registered agent, which will be the person who accepts legal paperwork on behalf of your business and will forward it to you.
In addition, you should list any capital contributions by other members, and include assets given to the company. Assets can be in the form of:
- Office Furniture
Money or compensation dispensed to members should be calculated after you factor in operating expenses. Distribution percentages are given to members based on a percentage owned in the LLC. Therefore, you should enter the names of members and each of their ownership shares in the business.
Any money that goes to the business should be in a business bank account, and it must be stipulated that any money withdrawn should be done at the discretion of a designated member.
LLCs are not required to conduct meetings in the same manner as corporations are, but your members should meet at least once a year, ideally at the LLC’s primary office. You are also not obligated to record meetings, but recording meetings is a good way to get everything on record while recording major company decisions. Place all major votes or business decisions on file.
You should also include a provision that assigns interests within the LLC. For instance, most businesses mandate that members offer their share to other members before those shares are sold outside of the LLC. If members decline the offer, that member is free to sell his or her interest outside of the business.
For single-member LLCs, you can write in the operating agreement that you wish to create the company as a distinct entity from the owner, where all owned assets of the LLC are not owned by the LLC creator.
With that, all members must consent to the sale or purchase of any shares in a unanimous vote, and members must consent to the transaction in writing. Further, the members must vote on the admittance of new members. If a member dies, you have the following choices:
- The LLC can have 60 days to decide whether the vote would remain active
- The vote would be terminated.
Members who wish to leave the company due to sudden debt cannot do so. The dissolution or liquidation of the LLC should also be detailed in the operating agreement, including the selling of remaining assets.
To learn more about a free sample LLC operating agreement, submit your legal inquiry to our UpCounsel marketplace. UpCounsel has some of the best lawyers in the nation who will help you draft a sound operating agreement that all of your members can agree to. In addition, our lawyers will assist in any legal disputes that may arise between your members and will be by your side should any unresolved business disputes end up in the courtroom.