LLC Bylaws Sample: Everything You Need to Know
An LLC bylaws sample provides a template of the operating agreement for a limited liability corporation. 3 min read
2. Outline of LLC Bylaws
3. Contact Information and Principals
4. Term of the LLC
5. Member Rights and Responsibilities
6. Member Contributions
7. Profit and Loss Distribution
LLC Bylaws/Operating Agreement
An LLC bylaws sample provides a template of the operating agreement for a limited liability corporation. Although most states don't require a new LLC to have an operating agreement in place, this legally binding document is critical as it governs the company's operations. Well-written bylaws prevent conflict by creating a formal structure and establishing procedures for decision-making and other aspects of running the company.
While a single-member LLC may not need an operating agreement, bylaws are a must for companies with more than one owner. One of the main benefits of establishing an LLC is the benefit to define membership percentages in the operating agreement. Unlike with a corporation, these don't need to be based solely on a member's financial contribution but can also take sweat equity into account.
Each member should store a copy of the executed LLC operating agreement in a safe place.
Outline of LLC Bylaws
The LLC operating agreement should include:
- The official legal name of the LLC
- A copy of the articles of organization and/or certificate of formation
- The name and address of the registered agent or office
- The proposed term of the LLC, if not indefinite
- Members' voting rights
- Procedures for company continuance if a member departs or dies
- Mission and purpose of the LLC
- Principal business location
- Procedures for adding new members
- Each member's initial contribution and the amount
- Plans for LLC profits and losses, including distribution procedures
- Procedures for operating the company
- Roles, rights, responsibilities, and powers of members and managers
- Bank account information
Contact Information and Principals
LLC bylaws must include a clause that identifies the company, its managers and members, and its location. This can use straightforward language such as "The name of the limited liability company is...". You can include the registered agent address if you don't have an office in the state in question. The registered agent is an individual who resides in the state and has agreed to accept official legal notices and service of process on behalf of the LLC; many companies opt to hire a lawyer to hold this position.
Term of the LLC
When an LLC is established, the members must decide whether it will be automatically dissolved on a specific date or exist in perpetuity with specific dissolution procedures in place. You should detail whether remaining members can purchase the shares of a member who is leaving, and whether this must be done in a lump sum or with installment payments. Also note whether a departing member will be replaced and the procedure for doing so.
If you plan for the LLC to exist in perpetuity, include dissolution procedures in the bylaws (typically a majority vote of members at a specific meeting for purposes of voting on a resolution to dissolve).
Member Rights and Responsibilities
The LLC bylaws are a chance for members to detail how they plan to run a company. For this purpose, you can include clauses that assign each member a specific role and delineate its responsibilities. Some LLC members choose to hire professional managers to handle the day-to-day operation.
You should also include clauses with information about how the LLC is organized, where and when member meetings will be held, how members will be notified of upcoming meetings, and rules of order for the meetings. Some LLCs have formal annual meetings with minutes, while others do not. However, records of votes and other important decisions should be placed on file.
If any members have personally contributed funds to the LLC, this contribution and the amount must be documented in the bylaws. You should also note gifts such as office furniture, land, or vehicles so their value is recorded for tax purposes.
Profit and Loss Distribution
The LLC operating agreement must detail how losses and profits are shared among members, including what percentage of cash flow is distributed to members and what percentage is reinvested in the company. Note the percentage of each member's share, which is often proportional to his or her capital investment.
Indicate when the fiscal year begins and ends, who is keeping the books for the LLC, and who has check-writing privileges.
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