LLC Operating Agreement Draft

Yes, single-member LLCs need an operating agreement to preserve their limited liability status. Courts and banks look at this document to verify that the business is a separate legal entity from your personal finances. Without it, your personal assets are at a much higher risk of being targeted in a business-related lawsuit.

No, you do not file your operating agreement with the state government; it is kept internally with your official business records. The state only requires your Articles of Organization during the initial formation process. You will, however, need to show your operating agreement to banks to open a business account or to investors during funding rounds.

To resolve deadlocks, a strong operating agreement includes a pre-negotiated dispute resolution clause. This clause can mandate third-party mediation, require an external advisory board to cast a tie-breaking vote, or outline a buy-sell provision where one partner buys out the other. Without these defined paths, you may have to go to court to dissolve the business entirely.

Yes, you can amend your operating agreement at any time as your business grows and changes. The agreement itself should contain an amendment clause specifying the percentage of member votes required to approve a change. Once the amendment is agreed upon, it must be drafted, signed by the members, and securely stored with the original document.