LLC Operating Agreement Template
Establish clear rules for your limited liability company. This agreement helps partners avoid disputes by defining how the business is run and how profits are split.
Preview
How to use this template
- Fill in the company details and member contributions.
- Review the management structure and ownership percentages.
- Download the document as a PDF or copy the text.
- Sign the agreement with all members to make it official.
When to use this template
Use an LLC operating agreement to record how your limited liability company is owned and run: who contributed what, how profits are shared, who makes decisions and what happens when a member leaves.
Some states require LLCs to have an operating agreement, and banks and investors often ask for one. Without it, your state's default LLC rules apply, which may not match what the members agreed.
Check before you sign
- The ownership percentages add up to 100% and match the contributions you agreed.
- Member-managed or manager-managed matches how the LLC is really run.
- The decisions that need all members are listed.
- There is a buy-out route when a member leaves, dies or becomes unable to work.
- You have discussed the tax treatment of the LLC with an accountant; that is a separate choice.
Full text of the llc operating agreement template
This is the complete template. Words in [brackets] are filled in automatically when you use the form above; where the template has options, the form shows only the one you choose.
LLC OPERATING AGREEMENT
1. Formation
This Operating Agreement is entered into on [Effective date] by [Member A name], residing at [Member A address], and [Member B name], residing at [Member B address].
The parties hereby agree to operate as the members of [LLC name], a limited liability company formed under the laws of [State of formation].
2. Business Purpose
The purpose of the company is to engage in [Business purpose] and any other lawful business activities related to this purpose.
3. Capital Contributions
[Member A name] shall contribute [Initial contribution of Member A] to the company, and [Member B name] shall contribute [Initial contribution of Member B].
No member shall be required to make additional capital contributions unless all members agree to such contributions in a written document signed by all parties.
4. Ownership Interests
The membership interests in the company shall be held as follows:
Member A ([Member A name]): [Ownership percentage of Member A]% Member B ([Member B name]): [Ownership percentage of Member B]%
5. Profits and Losses
All profits and losses of the company shall be allocated to the members in proportion to their respective ownership percentages, subject to applicable tax laws and regulations.
6. Distributions
Distributions of cash or other assets shall be made at such times and in such amounts as decided by the members or, if the company is manager-managed, by the manager, provided that the company remains able to pay its debts as they become due.
All distributions shall be made to members in proportion to their ownership percentages.
7. Management
If you choose: Member-managed (the members run the LLC)
The company shall be member-managed. Members shall have management authority in proportion to their ownership interests.
Day-to-day operational decisions may be made by any member. However, major decisions as defined in Section 8 require the unanimous consent of all members.
If you choose: Manager-managed (one or more managers run the LLC)
The company shall be manager-managed. [Manager] is appointed as the manager to handle the day-to-day operations of the business.
While the manager handles daily activities, major decisions as defined in Section 8 still require the unanimous consent of the members.
8. Major Decisions
The following actions require the unanimous written consent of all members: - Admitting new members to the company; - Selling substantially all of the company's assets; - Borrowing funds above an amount agreed upon by the members; - Changing the primary business purpose of the company; - Amending this Operating Agreement; - Dissolving the company.
9. Books, Records, and Banking
The company shall maintain a separate bank account for all business transactions. Accurate books and financial records shall be kept at the company's principal place of business.
Every member has the right to inspect and copy the company's books and records upon reasonable notice.
10. Transfer of Interests
No member may sell, assign, or transfer their membership interest without the prior written consent of the other members.
If a member intends to transfer their interest, the remaining members shall have a right of first refusal to purchase that interest on the same terms offered by a third party.
11. Withdrawal, Death, or Incapacity
Upon the withdrawal, death, or legal incapacity of a member, the remaining members shall have the option to purchase the departing member's interest.
The purchase price shall be the fair market value, as agreed upon by the members or determined by an independent professional appraiser.
12. Limited Liability and Indemnification
To the extent permitted by law, no member shall be personally liable for the debts, obligations, or liabilities of the company beyond their capital contributions.
The company shall indemnify and hold harmless any member who acts in good faith and in a manner they reasonably believe to be in the best interest of the company.
13. Dissolution
The company shall be dissolved upon a unanimous vote of the members or as otherwise required by law.
Upon dissolution, all company debts shall be paid first. Any remaining assets shall be distributed to the members in proportion to their ownership percentages.
14. Governing Law
This Agreement and the affairs of the Company are governed by the laws of [State of formation].
15. General Provisions
This document constitutes the entire agreement between the members and supersedes any prior oral or written understandings.
Any amendments to this agreement must be made in writing and signed by all members.
If any part of this agreement is found to be unenforceable, the remaining provisions shall continue in full force and effect.
Signatures
Member A
Signature: ____________________
Name and title: ____________________
Date: ____________________
Member B
Signature: ____________________
Name and title: ____________________
Date: ____________________
Frequently asked questions
What is an LLC Operating Agreement?
It is a legal document that outlines the ownership structure and operating procedures of a limited liability company. It governs how decisions are made and how profits and losses are distributed among members.
What should this agreement include?
A strong agreement should cover capital contributions, ownership percentages, management roles, the process for transferring interests, and the steps for dissolving the company.
Is this template legally binding?
This template can become a binding contract once signed by all parties. However, it is a general tool and not legal advice; you should have a lawyer review it to ensure it meets your specific needs and local laws.
Does my LLC need an operating agreement?
Some states legally require one, but it is highly recommended for all LLCs, including single-member ones. It helps protect your limited liability status and prevents future disputes over business operations.
Can I edit the text of the contract?
Yes. Once you generate the document, you can download or copy the text into your preferred editor to make any necessary custom changes.
Is my business data stored on your servers?
No. All data entered into the form stays in your browser and is not stored or transmitted to our servers.
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