1. What Is an LLC?
2. Forming an LLC
3. What Is an LLC Operating Agreement?
4. Steps in Writing an LLC Operating Agreement

A simple LLC operating agreement template can help you keep your business organized, whether there's only one member or multiple owners.

What Is an LLC?

A limited liability company, or LLC, is a business entity that offers asset protection through limited liability and gives members the opportunity to own a percentage of the company based on their contribution. If your LLC is registered and currently active in your state, you can then create the LLC's operating agreement.

Forming an LLC

  • Choose your state. It's best to register your LLC in the state your business will operate, which in most cases is your home state. If you want to conduct business in another state, you'll have to find a registered agent from that state.
  • Select a name. It's best to choose a unique but memorable name and to make sure the website domain is available for you to use.
  • Select a registered agent. This is a member or other authorized individual who takes care of sending and receiving legal documents for the LLC. The agent must have a physical address in the state. They are also responsible for letting the state know if the address changes; failure to do so can lead to dissolution.
  • File the Articles of Organization. Depending on the state, your LLC can file the articles either by postal mail to the State Secretary's Office or online through their website. You will need to state important information such as the LLC's permanent and mailing addresses, the registered agent, and an email address for important state notices. A fee may apply.
  • Create an operating agreement. This document does not need to be submitted to the state, but it contains important information for the members of the LLC.

What Is an LLC Operating Agreement?

While the name may differ by state, the operating agreement states the privileges and obligations of all the LLC members, including management, decision-making procedures, and dissolution procedures. It also has information about the LLC, the names and addresses of the members, and how income and losses are shared.

Steps in Writing an LLC Operating Agreement

Whether you have an LLC with you as the sole member or there are two or more owners, follow these steps and tips when drafting the operating agreement:

  1. State important information about the business, such as the LLC's name, address, and registered agent.
  2. State the capital contributions of each member, assets owned by the company, and meeting dates and locations. Include a clause that states who owns what in the business.
  3. If you are the only member of your LLC, you can state that the entity owns all the assets but that you as a member don't own any of them.
  4. For an LLC with multiple members, place a “Right of First Refusal” section, where members are given the right to buy a member's share of the company before a third-party individual is given the chance. If no member wants to buy the share for the set price, it can be presented to the public for purchase.
  5. New membership should be voted on unanimously by all members.
  6. Dissolution due to death of a member should be voted on within a 60-day time frame. No one should be able to leave the entity due to debt or being forced out by others.
  7. If your LLC offers certificates that show company interest, members will have the chance to get these.
  8. Any amendments should be decided by a majority vote among the members to avoid surprise edits.
  9. If the LLC has one member, an Indemnification section will free that individual and his or her family members from any liability within the business. This does not including criminal acts or negligence done by the member.
  10. The last section is left for any terms and conditions not found or presented in the previous parts of the agreement.

For your convenience, you can also look at this operating agreement template for LLCs with one member or this operating agreement template for LLCs with two or more members; both are for businesses formed in New York. Use the appropriate template based on the number of members within the business.

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