{"id":4845,"date":"2016-04-04T10:47:45","date_gmt":"2016-04-04T15:47:45","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/incorporation-and-legal-structures\/making-llc-operating-agreements.html"},"modified":"2025-10-24T23:28:00","modified_gmt":"2025-10-25T04:28:00","slug":"making-llc-operating-agreements","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/incorporation-and-legal-structures\/making-llc-operating-agreements.html","title":{"rendered":"Making LLC Operating Agreements"},"content":{"rendered":"\n
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Making LLC Operating Agreements<\/h1>\n\n
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\n By Jade Yeban, Esq.<\/a> | Legally reviewed by Catherine Hodder, Esq.<\/a>\n | Last updated\n
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Editorial Note: We earn a commission from affiliate partner links on FindLaw. Commissions do not affect the editorial integrity of our legal content.<\/p>\n\n <\/div>\n \n

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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

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An LLC operating agreement is a legal document<\/span> that sets forth the ownership, management structure<\/span>, and internal rules for running the company. While not required in every state, it is critical for resolving owner disputes and protecting the limited liability status of the LLC.<\/p>\n\n <\/div>\n\n\n\n

A limited liability company<\/span>, or LLC, is a popular business type. This is because it protects business owners<\/span> from personal loss if the company has problems. Think of it as a shield for your personal assets<\/span> if your business owes money.\u00a0<\/p>\n

When starting a business, companies will draft charter documents to create the company. For a corporation, this will be articles of incorporation<\/span>. For an LLC<\/a>, it is\u00a0articles of organization<\/span><\/a>. The articles of organization<\/span> are filed with the secretary of state<\/span> of the state in which you choose to register your business to legally form your business.<\/p>\n

Either concurrently or once the articles of organization<\/span> are filed and accepted by the state, companies should draft internal documents<\/span> that explain the rules and regulations that will govern the business. For corporations<\/a>, those are corporate bylaws. For an\u00a0LLC<\/a>, it is called an LLC operating agreement. These documents do not have to be filed with the state.<\/p>\n

This article will explain why an LLC<\/a> operating agreement is such an important document to create at the time of LLC formation<\/span>. It will discuss the key elements that make up an operating agreement and how to write an operating agreement for an LLC.<\/p>\n

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Why You Need an LLC Operating Agreement<\/h2>\n

While operating agreements aren\u2019t mandatory in all states, it\u2019s a good idea to have one prior to launching an LLC. Even single-member LLCs<\/span>, owned by a sole member<\/span>, can benefit from operating agreements. Evidence of an operating agreement helps prove your business is a separate entity that maintains your liability protection<\/span>.<\/p>\n

It\u2019s not uncommon for friends and family members to go into business together based on a verbal understanding, especially if it\u2019s a small business<\/span>. However, it is best to take the time to prepare a written operating agreement right from the start. Having an operating agreement will provide many benefits, such as:<\/p>\n