LLC operating agreement builder

Template only - not legal advice. LLC statutes and default rules vary by state. Multi-member LLCs with significant assets or complex ownership arrangements should have this document reviewed by a business attorney before adoption. See our full disclaimer.

1. LLC information

LLC legal name

State of formation

Agreement effective date

Principal business address

Business purpose

2. Members and ownership

Member structure

Member name(s) and ownership percentage List one member per line with their ownership percentage. Percentages should total 100%.

3. Management structure

Management type

Manager name (if manager-managed)

Voting threshold for major decisions

4. Capital contributions and distributions

Initial capital contributions

Profit and loss distribution

Distribution schedule

5. Membership changes and transfers

Transfer of membership interest

Buyout terms if a member leaves, dies, or becomes incapacitated

6. Dissolution

Events triggering dissolution

Your LLC operating agreement

Get a business attorney review

A business attorney reviews your operating agreement for state-specific compliance, tax election alignment, and completeness of buyout and dissolution provisions before you and your co-members sign.

Why does every LLC need an operating agreement, even single-member ones?

Without a written operating agreement, your LLC is governed by your state's default LLC statute - a one-size-fits-all set of rules that may not reflect how you actually want the business to operate, particularly around profit distribution, management authority, and what happens when a member wants to leave.

For single-member LLCs, an operating agreement still matters significantly - it reinforces the separation between you and the business, which courts look at when deciding whether to respect the liability shield. Without this documentation, a single-member LLC can look more like a personal alter ego than a genuine separate business, weakening the very liability protection you formed the LLC to get.

If you haven't yet decided on your entity type, use the business entity selector first to confirm an LLC is the right structure before building out this governance document.

What is the difference between member-managed and manager-managed?

In a member-managed LLC, all members participate directly in running the business and have authority to bind the LLC in ordinary business matters. This works well for small LLCs where all owners are actively involved day-to-day.

In a manager-managed LLC, one or more designated managers (who may or may not also be members) handle daily operations, while non-manager members typically have more limited involvement, often just voting on major decisions. This structure suits situations with passive investors who want ownership without operational involvement, or larger LLCs that benefit from centralized decision-making.

What should a buyout provision address that people often overlook?

A complete buyout provision addresses the "triggering events" (voluntary departure, death, disability, divorce, bankruptcy, or termination for cause), the valuation method (independent appraisal, a pre-agreed formula, or book value), the payment terms (lump sum vs. installments over time), and whether the departing member's interest must first be offered to remaining members before any outside sale.

Disputes over business valuation are one of the most common and expensive sources of litigation between LLC members - specifying the valuation method in advance, before any actual departure creates conflicting incentives, significantly reduces this risk. If ownership disputes arise, review the partnership agreement builder for comparison if you're considering restructuring as a different entity type.

Frequently asked questions

A small number of states (including New York and California) legally require LLCs to adopt an operating agreement, though enforcement of this requirement is often limited in practice. Most states don't require one by law, but virtually every business attorney recommends adopting one regardless, since the alternative is being governed entirely by default state statutory rules that may not match your actual business arrangement. Banks, investors, and even some vendors also frequently request a copy of the operating agreement before opening accounts or entering into significant agreements with the LLC.

No - unlike the Articles of Organization (or Certificate of Formation), which must be filed with the state to legally form the LLC, the operating agreement is an internal document kept by the LLC and its members. It's not filed publicly and doesn't need state approval. This also means it can be amended by the members at any time (following whatever amendment process the agreement itself specifies) without any additional state filing, making it more flexible to update as the business evolves.

In most states, yes - to a significant degree. LLC statutes are largely "default rules" that apply only in the absence of a contrary agreement between members, meaning a properly drafted operating agreement can customize most aspects of how the LLC operates, including profit allocation, management structure, and transfer restrictions. However, certain provisions are typically non-waivable even by agreement - such as basic fiduciary duties, the right to certain information about the LLC, and specific dissolution rights in some states. An attorney can identify which provisions in your state are mandatory versus which can be customized.

The LLC continues to exist and operate under the state's default statutory rules, which commonly include equal management rights and equal profit-sharing regardless of actual capital contributions or work performed - rarely what most multi-member LLCs would have chosen if given the option. Disputes among members without a written agreement are significantly harder to resolve, since there's no document specifying decision-making authority, profit splits, or exit procedures. This is one of the most common and preventable sources of business litigation between co-founders.

Yes, this is an often-overlooked but important provision. Without specific language addressing it, a divorcing member's spouse could potentially receive an ownership interest in the LLC as part of a divorce settlement, effectively making them a co-owner of the business without the other members' consent. Many operating agreements include a provision requiring the LLC (or remaining members) to have the right to buy out any interest awarded to a former spouse in a divorce, at a specified valuation, to keep ownership within the intended group of business partners.