Protect Your LLC with a Proper Operating Agreement

An operating agreement is a legal document that establishes the rules for how your LLC operates. It defines ownership percentages, profit distribution, voting rights, member responsibilities, and procedures for major decisions like adding new members or dissolving the company. Think of it as your LLC's rulebook that all members agree to follow.

Requirements vary by state. Some states like California, Delaware, Maine, Missouri, and New York require LLCs to have an operating agreement. However, even in states where it's not mandatory, having one is strongly recommended. Without it, your LLC defaults to state law, which may not align with how you want to run your business.

Absolutely. Even as a sole owner, an operating agreement is essential. It reinforces the separation between you and your LLC (protecting your personal assets), establishes legitimacy with banks and partners, and documents your business procedures. Many banks won't open a business account without seeing an operating agreement.

Our operating agreement covers: company formation details, member information and ownership percentages, capital contributions, profit and loss allocation, management structure (member-managed vs. manager-managed), voting rights and decision procedures, transfer of membership interests, dissolution procedures, and state-specific provisions required by your formation state.

Yes. Our questionnaire captures your specific business structure and preferences to generate a customized document. You can specify ownership percentages, profit distribution ratios, management roles, and voting thresholds. The resulting agreement reflects your actual business arrangement, not a generic template.

Yes, operating agreements can be amended at any time with the consent of members as specified in the original agreement (typically majority or unanimous approval). Common reasons for amendments include adding or removing members, changing ownership percentages, modifying profit distributions, or updating management structure.

For standard LLCs with straightforward ownership structures, our attorney-reviewed templates are sufficient and save significant legal fees. Our templates comply with state requirements and cover all essential provisions. However, for complex situations such as multiple investors, unique profit-sharing arrangements, or specific liability concerns, consulting a business attorney may be worthwhile.

Yes. Our operating agreements are accepted by major banks including Mercury, Chase, Bank of America, and others. The document includes all standard provisions banks look for: member information, ownership structure, and authorization for banking activities. Thousands of our clients have successfully used our agreements to open US bank accounts.

In a member-managed LLC, all members participate in daily business decisions. In a manager-managed LLC, designated managers (who may or may not be members) handle operations while other members are passive investors. Our operating agreement lets you choose either structure and clearly defines the rights and responsibilities of each role.

The operating agreement helps maintain the legal separation between you and your LLC, known as the 'corporate veil.' Courts may disregard your LLC's liability protection if you don't maintain proper business formalities. Having a documented operating agreement demonstrates that you treat your LLC as a separate legal entity, strengthening your personal asset protection.