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

In a member-managed LLC, all members share management authority — each member can act on behalf of the LLC and bind it to contracts in the ordinary course of business. This works well for small LLCs where all owners are actively involved. In a manager-managed LLC, a designated manager (who may or may not be a member) handles day-to-day operations, and members are passive investors. This structure is better for LLCs with passive investors, LLCs where one member handles operations, or LLCs that want clear lines of authority.

Can a single person have an LLC?

Yes. A single-member LLC (SMLLC) is owned by one person or one entity. It provides the same limited liability protection as a multi-member LLC. For federal tax purposes, a single-member LLC is a 'disregarded entity' — the LLC's income and expenses are reported on the owner's personal tax return (Schedule C for sole proprietors, or on a corporate return if owned by a corporation). A SMLLC can also elect to be taxed as a corporation by filing IRS Form 8832, or as an S-Corporation by filing Form 2553.

How do I add a new member to an existing LLC?

Adding a new member to an LLC typically requires: (1) unanimous consent (or majority consent, if the operating agreement allows) of the existing members; (2) a written amendment to the operating agreement documenting the new member's name, address, and ownership percentage; (3) a new or amended Schedule of Members; and (4) updating the capital contribution records to reflect the new member's contribution. In some states, you may also need to file an amended Articles of Organization with the Secretary of State. If the new member is receiving a membership interest in exchange for an investment, this may also trigger securities law compliance obligations.

What happens to an LLC if a member dies?

This depends on the operating agreement and state law. The buy-out provisions in this agreement address the most common scenario: the remaining members have the right to purchase the deceased member's interest at fair market value. Without a buy-out provision, the deceased member's heirs may automatically inherit the membership interest, potentially becoming unwanted co-owners. The operating agreement can also specify that membership interests are not transferable to heirs without remaining member consent. For LLCs with significant value, each member should also have a will or trust that designates what happens to their LLC interest.

Should my LLC be taxed as an S-Corporation?

Whether to elect S-Corporation taxation depends on your LLC's income level and compensation structure. An S-Corp can reduce self-employment taxes by allowing members who work in the business to split their income between a 'reasonable salary' (subject to payroll taxes of about 15.3%) and distributions (not subject to payroll taxes). This can save money once the LLC's net income is high enough to justify the additional complexity and cost of payroll administration. Most advisors recommend considering an S-Corp election when the LLC's annual net profit exceeds approximately $50,000-$75,000. Consult a CPA to run the numbers for your specific situation.

Does an operating agreement need to be filed with the state?

Generally, no. The operating agreement is a private document kept by the members — it does not need to be filed with the state Secretary of State or any government agency. (This is different from the Articles of Organization, which must be filed with the state to form the LLC.) However, you should keep a signed original in your LLC's records and provide copies to all members. Some lenders or business partners may request a copy. In states where operating agreements are required by law, there may be penalties for failure to have one, but the document is still not filed publicly.

Free LLC Operating Agreement Template — Fill Out & Download Instantly

Free — No Sign-Up RequiredPDF & WordContent date March 22, 2026

⚠️ Important: This is a general informational template, not legal advice or a guarantee of validity. Requirements vary by state and situation. Verify current official requirements and seek a licensed attorney for consequential matters. Review our sources and methodology.

Document Completeness0%

Name, state, formation date, address, and registered agent

State of Formation*

The state in which the LLC is or will be organized — must match the articles of organization

LLC Full Legal Name*

Exactly as it appears (or will appear) in the articles of organization, including LLC, L.L.C., or Limited Liability Company

Date of Formation (Articles Filed)*

MM/DD/YYYY

Principal Business Address*

Registered Agent Name and Address*

Member names, addresses, and ownership percentages

Member Structure*

Single-Member LLC — one ownerMulti-Member LLC — two or more owners

Member 1 Full Legal Name*

Member 1 Address*

Member 1 Ownership Percentage*

Management structure and voting thresholds

Management Structure*

Member-Managed — All members share management authorityManager-Managed — A designated manager has day-to-day authority

Voting Threshold for Major Decisions*

Contributions, profit allocation, and distributions

Capital Contributions*

Profit and Loss Allocation*

Distribution Frequency*

Transfer restrictions, buy-out, and dissolution

Transfer Restrictions*

Buy-Out Provisions*

Dissolution Triggers*

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OPERATING AGREEMENT

[LLC Full Legal Name]

A [State of Formation] Limited Liability Company

This Operating Agreement ("Agreement") of [LLC Full Legal Name], a [State of Formation] limited liability company, is entered into as of [Date of Formation (Articles Filed)], by and among the members listed below (the "Members").

ARTICLE I — ORGANIZATION

1.1 Name. The name of the limited liability company is [LLC Full Legal Name].

1.2 State of Formation. The Company is organized under the laws of the State of [State of Formation].

1.3 Date of Formation. The Articles of Organization were filed with the [State of Formation] Secretary of State on [Date of Formation (Articles Filed)].

1.4 Principal Office. The principal place of business of the Company is:

[Principal Business Address]

1.5 Registered Agent. The Company's registered agent for service of process is:

[Registered Agent Name and Address]

1.6 Purpose. The Company is organized to engage in any lawful business activity permitted under the laws of the State of [State of Formation].

1.7 Term. The Company shall continue in existence until dissolved in accordance with this Agreement or applicable law.

ARTICLE II — MEMBERS AND MEMBERSHIP INTERESTS

2.1 Members. The Members of the Company and their initial membership interests are as follows:

2.2 Additional Members. Additional members may be admitted only upon the unanimous written consent of all existing Members and the execution of a written amendment to this Agreement.

ARTICLE III — MANAGEMENT

ARTICLE IV — CAPITAL AND FINANCES

4.1 Capital Contributions. The initial capital contributions of the Members are as follows:

[Capital Contributions]

4.2 Additional Capital. No Member shall be required to make additional capital contributions without their written consent.

4.3 No Interest on Capital. No Member shall receive interest on their capital contribution unless separately agreed in writing.

4.4 Profit and Loss Allocation. [Profit and Loss Allocation]

4.5 Distributions. [Distribution Frequency]

4.6 Tax Distributions. The Company shall, to the extent it has available cash flow, make distributions to Members in amounts sufficient to cover each Member's estimated tax liability attributable to their share of Company income, unless the Members unanimously agree otherwise.

ARTICLE V — TRANSFERS OF MEMBERSHIP INTERESTS

5.1 Transfer Restrictions. [Transfer Restrictions]

5.2 Buy-Out on Triggering Events. [Buy-Out Provisions]

5.3 Void Transfers. Any transfer in violation of this Article V shall be null and void.

ARTICLE VI — DISSOLUTION AND WINDING UP

6.1 Dissolution Triggers. [Dissolution Triggers]

6.2 Winding Up. Upon dissolution, the Company shall wind up its affairs by: (a) completing pending business; (b) collecting amounts owed to the Company; (c) paying and discharging all liabilities and obligations; and (d) distributing remaining assets to Members in proportion to their membership interests after payment of all debts.

6.3 Certificate of Dissolution. Upon completion of winding up, the Members shall file a Certificate of Dissolution (or Articles of Dissolution) with the [State of Formation] Secretary of State.

ARTICLE VII — TAX MATTERS

7.2 Tax Matters Member. The Members shall designate a tax matters member (or partnership representative) to handle all tax authority communications and elections on behalf of the Company.

ARTICLE VIII — GENERAL PROVISIONS

8.1 Governing Law. This Agreement is governed by the LLC Act of the State of [State of Formation] and applicable federal law.

8.2 Entire Agreement. This Agreement, together with the Articles of Organization, constitutes the entire agreement of the Members regarding the Company.

8.3 Amendment. This Agreement may be amended only by written instrument signed by all Members.

8.4 Severability. If any provision is unenforceable, the remaining provisions shall remain in effect.

8.5 Counterparts. This Agreement may be executed in counterparts.

IN WITNESS WHEREOF, the Members have executed this Operating Agreement as of the date first written above.

MEMBER 1:

_________________________________________

[Member 1 Full Legal Name]

Date: ______________________________________

Document Completeness0%

Name, state, formation date, address, and registered agent

State of Formation*

The state in which the LLC is or will be organized — must match the articles of organization

LLC Full Legal Name*

Exactly as it appears (or will appear) in the articles of organization, including LLC, L.L.C., or Limited Liability Company

Date of Formation (Articles Filed)*

MM/DD/YYYY

Principal Business Address*

Registered Agent Name and Address*

Member names, addresses, and ownership percentages

Member Structure*

Single-Member LLC — one ownerMulti-Member LLC — two or more owners

Member 1 Full Legal Name*

Member 1 Address*

Member 1 Ownership Percentage*

Management structure and voting thresholds

Management Structure*

Member-Managed — All members share management authorityManager-Managed — A designated manager has day-to-day authority

Voting Threshold for Major Decisions*

Contributions, profit allocation, and distributions

Capital Contributions*

Profit and Loss Allocation*

Distribution Frequency*

Transfer restrictions, buy-out, and dissolution

Transfer Restrictions*

Buy-Out Provisions*

Dissolution Triggers*

What Is a LLC Operating Agreement?

An LLC operating agreement is a foundational legal document that governs the internal operations of a limited liability company. It defines the ownership structure, management authority, voting rights, capital contributions, profit and loss allocations, distribution policies, transfer restrictions, buy-out procedures, and dissolution process. While many states do not legally require a written operating agreement, having one is essential to maintain the LLC's liability protection, define the members' rights and responsibilities, and avoid falling back on default state LLC statutes that may not match the members' intentions.

When Do You Need It?

You need an LLC operating agreement when you form a new limited liability company, whether single-member or multi-member. Banks and lenders often require an operating agreement to open a business bank account or obtain a business loan. If you are adding new members, changing the management structure, or bringing on investors, you should update the operating agreement to reflect the new arrangement.

What's Included in This Template

LLC name, formation date, and principal address
Registered agent information
Single-member or multi-member structure
Member names, addresses, and ownership percentages
Management type: member-managed or manager-managed
Manager name and authority (for manager-managed LLCs)
Voting threshold for major decisions
Capital contributions by each member
Profit and loss allocation method
Distribution frequency and process
Transfer restrictions and right of first refusal
Buy-out provisions
Dissolution triggers and winding up process
Tax classification election

How to Fill It Out

Enter LLC Identification Details — Enter the LLC's full legal name (as it appears in the articles of organization), state of formation, formation date, principal business address, and registered agent name and address.

Select Member Structure and Enter Member Information — Choose single-member or multi-member. For single-member, enter the sole member's information. For multi-member, enter the name, address, and ownership percentage for each member. Percentages must total 100%.

Choose Management Structure — Select member-managed (all members share management authority) or manager-managed (a designated manager — who may or may not be a member — handles day-to-day operations). If manager-managed, enter the manager's name.

Set Voting, Capital, and Distribution Terms — Select the voting threshold required for major decisions. Describe each member's capital contribution. Set the distribution frequency (how often profits are distributed to members).

Configure Transfer and Dissolution Provisions — Transfer restrictions (right of first refusal) and buy-out provisions protect existing members from unwanted new co-owners. Dissolution triggers define when the LLC will wind up and close. Optionally, set the tax classification if you want the LLC taxed as an S-Corp or C-Corp.

Legal Requirements & Notes

LLC operating agreements are governed by the LLC act of the state where the LLC is organized. Key legal considerations: - **State-Specific Requirements:** Most states permit operating agreements to vary the default provisions of the state LLC act, but some provisions are non-waivable (e.g., the right to receive distributions upon dissolution, the right to inspect records). Delaware LLCs have the broadest contractual flexibility under the DLLCA. Some states (California, New York, Missouri) require operating agreements by law. - **Single-Member LLCs and Liability Protection:** The IRS treats single-member LLCs as disregarded entities by default — the LLC's income is reported on the owner's personal return. Courts have found that single-member LLCs lacking an operating agreement are more vulnerable to 'piercing the corporate veil' (holding the member personally liable) because the absence of formal documents suggests the member is not treating the LLC as a separate entity. An operating agreement reinforces the separation. - **Manager-Managed vs. Member-Managed:** In a member-managed LLC, every member is an agent of the LLC and can bind it in ordinary business transactions. In a manager-managed LLC, only the manager has this authority, which can protect members from unauthorized acts by co-members. Most multi-member LLCs with more than a handful of members use manager-managed structures. - **S-Corporation Election:** An LLC taxed as an S-Corp can potentially reduce self-employment taxes by splitting income between a reasonable salary (subject to payroll taxes) and distributions (not subject to self-employment tax). However, S-Corp status has eligibility restrictions (no more than 100 shareholders, only US citizens/residents as shareholders, one class of stock). Consult a CPA before making the election.

Frequently Asked Questions

A written operating agreement is legally required in a few states, including California, New York, Missouri, Maine, and Delaware. In most other states, it is not required but is strongly recommended. Even where not required, operating without a written agreement means the LLC is governed entirely by the state's default LLC statutes, which may not reflect what the members actually agreed upon. Banks and lenders almost universally require an operating agreement to open a business bank account or approve a loan. Without one, the LLC may be at greater risk of 'veil piercing' (losing limited liability protection).

Free LLC Operating Agreement Template — Fill Out & Download Instantly

OPERATING AGREEMENT

ARTICLE I — ORGANIZATION

ARTICLE II — MEMBERS AND MEMBERSHIP INTERESTS

ARTICLE III — MANAGEMENT

ARTICLE IV — CAPITAL AND FINANCES

ARTICLE V — TRANSFERS OF MEMBERSHIP INTERESTS

ARTICLE VI — DISSOLUTION AND WINDING UP

ARTICLE VII — TAX MATTERS

ARTICLE VIII — GENERAL PROVISIONS

MEMBER 1:

What Is a LLC Operating Agreement?

When Do You Need It?

What's Included in This Template

How to Fill It Out

Legal Requirements & Notes

Frequently Asked Questions

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Partnership Agreement

Joint Venture Agreement

Investment Agreement