LLC Operating Agreement: A Free Template
Starting a Limited Liability Company (LLC) is an excellent way of protecting your personal assets while running a business. An LLC is a hybrid business type, combining the personal asset protection of a corporation with the flexibility of a partnership. In most states, an operating agreement is not required for an LLC to exist legally. However, having one can help your company run smoothly and avoid conflict among members.
An operating agreement is a legal document that outlines how your LLC will operate. It specifies the roles and responsibilities of members, the company`s management structure, and voting procedures. It also lays down the procedures for adding or removing members, how profits and losses will be divided, and how the company will dissolve.
While you can hire a lawyer to draft an operating agreement, it can be expensive. Fortunately, there are many free templates available online that you can customize to your specific needs. Here is a simple LLC operating agreement template that you can use:
LLC Operating Agreement
This Operating Agreement (“Agreement”) is made and entered into on [Date of Agreement] by and between the Members listed below:
[List all the members and their percentage ownership]
1. Formation of the LLC
The LLC was formed on [Date of Formation] and is organized under the laws of [State of Formation]. The members form the LLC as equal or unequal percentage owners as determined by [State of Formation] law.
2. Purpose of the LLC
The purpose of the LLC is to [Purpose of the LLC].
3. Management of the LLC
The LLC is a [Member-managed or Manager-managed] LLC.
a. Member Managed LLC
The LLC`s management is vested in its Members. Each Member has an equal vote in the management of the LLC, except as otherwise provided in this Agreement.
b. Manager Managed LLC
The LLC`s management is vested in its Managers. Each Manager has an equal vote in the management of the LLC, except as otherwise provided in this Agreement.
4. Contributions
Each member`s initial contribution is as follows:
[List each member`s initial contribution]
5. Profits and Losses
The LLC`s profits and losses will be allocated among the Members as follows:
[List how the profits and losses will be allocated]
6. Capital Accounts
The LLC will maintain a separate capital account for each Member. Each Member`s capital account will be increased by any contribution and allocation of profits and decreased by any allocation of losses and distributions.
7. Distributions
Distributions of profits will be made annually, or more frequently as determined by the Members, as follows:
[List how the distributions will be made]
8. Books and Records
The LLC will maintain accurate books and records of its transactions.
9. Transfer of Membership Interests
No Member may sell or transfer their membership interest without the unanimous consent of the other Members.
10. Dissolution
The LLC may be dissolved by a unanimous vote of all Members.
11. Miscellaneous
a. Governing Law – This Agreement shall be governed by and construed under the laws of the State of [State of Formation].
b. Severability – If any provision of this Agreement is found to be invalid, illegal, or unenforceable, the remaining provisions shall remain in full force and effect.
c. Entire Agreement – This Agreement constitutes the entire agreement between the Members and supersedes all prior and contemporaneous agreements, representations, and understandings of the parties.
d. Amendments – This Agreement may not be amended, except in writing and signed by all Members.
Conclusion
Operating agreements are essential for any LLC, as they protect your business and prevent any disputes among members. Writing one from scratch can be a daunting task, but using a free template can save you time and money. Remember that this is a basic template that may not fit your specific needs, so consult an attorney or CPA for professional advice.
With this free LLC operating agreement template, you can start your business and protect your assets more efficiently. Good luck!