What is an operating agreement?
An Operating Agreement is an agreement among LLC members about its business and the rights and duties of its members. When you complete the incorporation filing process with MyCorporation, a sample Operating Agreement is always included with your initial formation kit. No matter what method you choose to form your business, an operating agreement is an important asset and the foundation of any LLC.
With over 20 years of experience forming LLCs in all 50 states, we have drafted and molded our customized operating agreement to be a suitable starting point for use by almost any kind business.
What kind of information does an operating agreement contain?
While the details contained in the operating agreement may vary, the general information outlined includes but is not limited to:
- The LLCs business activities / purpose
- Members of the LLC
- Membership provisions
- Tax and financial provisions
- Capital provisions
- Membership withdrawal and transfer provisions
- Dissolution provisions
Is every LLC required to have an operating agreement?
While all LLCs are required to file an Article of Organization as part of the business formation, not all states require that an operating agreement must be drafted. In fact, many states have very few if any laws regarding written operating agreements or only require them in certain circumstances. However, it is highly recommended that every LLC draft a customized operating agreement to set forth the details of how it will be managed, otherwise the default state laws will be used instead.
Which states require an operating agreement?
Currently the states that require written operating agreements include Arkansas, the District of Columbia, Iowa (unless otherwise specified in the Articles of Incorporation), and New Mexico. Colorado, Connecticut, Georgia, and Kentucky require a written operating agreement only if the LLC has more than one member.
Where do I file an operating agreement?
LLCs do not actually file their operating agreement with any governing agency. Instead, once the operating agreement has been drafted and all the details agreed on by its members, each member will sign the final document, which can later be referred to at a later time should any legal / operational issues arise.