An operating agreement is the rulebook of your LLC: who owns what, who decides, and what happens when someone leaves. Banks ask for it, partners rely on it, and courts respect it. Here is exactly what a solid agreement must contain — use it as a checklist before you sign anything.
This is general information, not legal advice. For complex setups, have a licensed attorney in your state review the final document.
Legal name, state of formation, registered agent, and business purpose. Boring — but banks check this page first.
Who owns the LLC and in what percentages. Must add up to 100%. For a single-member LLC: one line stating sole ownership.
Who put in what: cash, equipment, or sweat equity — and what happens if more money is needed later.
One vote per person or votes proportional to ownership? Define it now, or the 50/50 deadlock will define it for you — painfully.
Usually follows ownership shares, but not always. Spell out when and how distributions are paid.
Member-managed (owners run it) or manager-managed (you hire a manager)? List roles, powers, and who can sign contracts and open bank accounts.
See LLC agreement templates →How decisions are documented: annual meetings, written consents, where records are kept. Paper trails protect the corporate veil.
Can new partners join? Who approves them, and on what terms? Without this clause, every new partner is a negotiation from scratch.
The clause everyone skips and everyone needs: what happens if a member quits, goes bankrupt, or dies. Right of first refusal, valuation method, payout timeline.
How the LLC can be closed, who votes for it, and how debts and leftovers are settled. Hope you never use it; be glad it’s there.
Yes. Three reasons: banks often require it to open a business account, it strengthens your liability shield, and it proves the business is separate from you personally.
A good template already contains all ten clauses — you just fill in your details. Compare vetted options here: Legal Templates.
Get an LLC agreement template →