Operating Agreement LLC Virginia Template: Everything You Need to Know
An operating agreement LLC Virginia template is the basic form one must follow in order to correctly draw up an operating agreement for an LLC—or limited liability company—in Virginia. 3 min read
2. Operating Agreements for Multi-Member LLCs
3. Writing the Operating Agreement
Operating Agreement Overview
An operating agreement LLC Virginia template is the basic form one must follow in order to correctly draw up an operating agreement for an LLC—or limited liability company—in Virginia. An operating agreement is a legally binding document that describes the regulations, rules, and structure of an LLC, all of which the LLC members agree to abide by. It is not required in Virginia, but having one is recommended.
Since Virginia does not require an operating agreement, there are no specifications regarding what should be in one. Thus, an operating agreement can be as simple or complex as is deemed necessary, and the responsibility is on the LLC members to make sure the operating agreement covers the issues that are important to them and does so in such a way that it has value in a court of law. Some topics that it may be a good idea to cover in an operating agreement include:
- The responsibilities and duties of the members and/or managers.
- How meetings and voting will be handled.
- The type of management (member managed or manager managed).
Advantages to having an operating agreement include:
- Controlling how your LLC will be run (as opposed to following the state’s default rules).
- Strengthening your limited liability.
- Avoiding future disputes by laying out how issues will be resolved beforehand.
Operating Agreements for Multi-Member LLCs
Although it is a good idea for single-member LLCs to have an operating agreement, it is an especially good idea for multi-member LLCs to have one. The reason for this is that in a multi-member LLC there is the possibility for disputes between those members if rules for operating the LLC have not been established from the outset.
One might want to believe that they will always get along with their business partners, but it is impossible to foresee where one’s business will take them or where people will stand on certain issues two, five, or ten years down the road. An operating agreement may be able to forestall some disputes and can at least give some guidance for how to handle them if they arise.
Some member-related issues that it may be a good idea to cover in the operating agreement include:
- The amount of contributions to the LLC each member will make.
- If continual contributions will be made by the members.
- What the cash value of a non-cash member investment is.
- How a member’s interest can be bought out if the member wants to leave the LLC.
- How the value of a member’s interest will be assessed.
- How profits and losses will be distributed to the members.
Writing the Operating Agreement
Because Virginia does not regulate operating agreements, it does not provide forms pertaining to them. However, there are other, non-government sources on the internet that provide them for free. These may vary somewhat depending on the source, but generally they will follow the same basic template. This template is as follows:
- LLC Name. The name of your LLC should be stated or filled in on the opening line of the document.
- Basic agreement information. The agreement’s effective date should be entered in dd/mm/yyyy format. The LLC’s status as single-member or multi-member should be stated. If single-member, the member’s name, business address, and state of residence should be stated; if multi-member, the member’s name and address should be listed.
- Contribution/Distribution Information. The contribution amounts of each member (if multi-member) and the percentage of interest each member will have in the company should also be listed
- Taxes, Records, and Books.Information pertaining to the handling of bank accounts, taxes, records, and books should be stated.
- Titles, Duties, and Procedures. Information pertaining to LLC member meetings, member duties, first refusal rights, membership admission, membership withdrawal, dissolution, liquidation, member representation, member certificates, arbitration, notices, amendments, indemnification, and any other issues should be dealt with here.
- Signatures. In this final section, the date of document execution should be listed, along with the signature of the LLC representative and the LLC member or members.
Once the document is drawn up and signed, all members must receive a copy for their records.
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