Free LLC Operating Agreement

Keep everyone's best interests in mind with an LLC Operating Agreement.
This agreement establishes the relationship between the company and its members.



Frequently Asked Questions
Which tax classification should I choose?The disregarded entity option is only available to a single-member LLC. The company is 'disregarded' for income tax purposes allowing for pass-through taxation where the income is treated as the owner's personal income. If your LLC has only one member it will be treated as a disregarded entity by default unless you designate otherwise.

The Corporation option is available to any LLC. With this classification, the income of the LLC will be taxed first at the company level and then the members would pay income tax on any distributions.

For specific information on the pros and cons of each tax system, it is recommended you contact a tax lawyer in your area or a qualified tax accountant.
The partnership option is only available to an LLC with two or more members. A partnership classification allows for pass-through taxation where the company's income is taxed only once, as income tax on the earnings paid to each member. If an LLC has two or more members it will be treated as a partnership by default unless you designate otherwise.

The corporation option is available to any LLC. With this classification, the income of the LLC will be taxed first at the company level and then the members would pay income tax on any distributions.

For specific information on the pros and cons of each tax system, it is recommended you contact a tax lawyer in your area or a qualified tax accountant.

Your LLC Operating Agreement

Update Preview
This document preview is formatted to fit your mobile device. The formatting will change when printed or viewed on a desktop computer.
LLC Operating Agreement Page of
Page of


This Operating Agreement (the "Agreement") made and entered into this ___________ day of ____________________, ______________ (the "Execution Date"),


___________________ of ________________________________

(the "Member").


  1. The Member wishes to be the sole member of a limited liability company.
  2. The terms and conditions of this Agreement will govern the Member within the limited liability company.

IN CONSIDERATION OF and as a condition of the Member entering into this Agreement and other valuable consideration, the receipt and sufficiency of which is acknowledged, the Member agrees as follows:

  1. Formation
  2. By this Agreement, the Member forms a Limited Liability Company (the "Company") in accordance with the laws of the Commonwealth of Virginia. The rights and obligations of the Member will be as stated in the Virginia Limited Liability Company Act (the "Act") except as otherwise provided in this agreement.
  3. Name
  4. The name of the Company will be ________________________________________
  5. Sole Member
  6. While the Company consists only of one Member, any reference in this Agreement to two or more Members and that requires the majority consent or unanimous consent of Members, or that requires a certain percentage vote of Members, should be interpreted as only requiring the consent or vote of the sole Member.
  7. Purpose
  8. __________________________________________________________________________________________________________________________________________________________
  9. Term
  10. The Company will continue until terminated as provided in this Agreement or may dissolve under conditions provided in the Act.
  11. Place of Business
  12. The Principal Office of the Company will be located at _______________________________________________________ or such other place as the Member may from time to time designate.
  13. Capital Contributions
  14. The following table shows the Initial Contributions of the initial Member. The Member agrees to make the Initial Contributions to the Company in full, according to the following terms:


    Contribution Description

    Value of



    $ _____________

  15. Allocation of Profits/Losses
  16. Subject to the other provisions of this Agreement, the Net Profits or Losses, for both accounting and tax purposes, will accrue to and be borne by the sole Member:

    ___________________ of ________________________________
  17. Where the Company consists of two or more Members, no Member will have priority over any other Member for the distribution of Net Profits or Losses.
  18. Nature of Interest
  19. A Member's Interests in the Company will be considered personal property.
  20. Withdrawal of Contribution
  21. Where the Company consists of two or more Members, no Member will withdraw any portion of their Capital Contributions without the unanimous consent of the other Members.
  22. Liability for Contribution
  23. A Member's obligation to make their required Capital Contributions can only be compromised or released with the consent of all remaining Members or as otherwise provided in this Agreement. If a Member does not make the Capital Contributions when due, the Member is obligated at the option of any remaining Members to contribute cash equal to the agreed value of the Capital Contributions. This option is in addition to and not in lieu of any others rights, including the right to specific performance that the Company may have against the Member.
  24. Additional Contributions
  25. Capital Contributions may be amended from time to time, according to the business needs of the Company. However, if additional capital is determined to be required and an individual Member is unwilling or unable to meet the additional contribution requirement within a reasonable period, and where the Company consists of two or more Members, the remaining Members may contribute in proportion to their existing Capital Contributions to resolve the amount in default. In such case, the allocation of Net Profits or Losses and the Distribution of assets on dissociation or dissolution will be adjusted accordingly.
  26. Any advance of money to the Company by any Member in excess of the amounts provided for in this Agreement or subsequently agreed to, will be deemed a debt due from the Company rather than an increase in the Capital Contributions of the Member. This liability will be repaid with interest at such rates and times to be determined by a majority of the Members. This liability will not entitle the lending Member to any increased share of the Company's profits nor to a greater voting power. Repayment of such debts will have priority over any other payments to Members.
  27. Capital Accounts
  28. An individual capital account (the "Capital Account") will be maintained for each Member and their Initial Contributions will be credited to this account. Any Additional Contributions made by any Member will be credited to that Member's individual Capital Account.
  29. Interest on Capital
  30. No borrowing charge or loan interest will be due or payable to any Member on their agreed Capital Contributions inclusive of any agreed Additional Contributions.
  31. Management
  32. Management of this Company is vested in the Member.
  33. Authority to Bind Company
  34. Any Member has the authority to bind the Company in contract.
  35. Duty of Loyalty
  36. Any Member may invest in or engage in any business of any type, including without limitation, a business that is similar to the business of the Company whether or not in direct competition with the Company and whether or not within the established or contemplated market regions of the Company. Neither the Company nor any Member will have any right to that opportunity or any income derived from that opportunity.
  37. Duty to Devote Time
  38. Each Member will devote such time and attention to the business of the Company as the majority of the Members will from time to time reasonably determine for the conduct of the Company's business.
  39. Member Meetings
  40. Where the Company consists of two or more Members, a meeting may be called by any Member providing that reasonable notice has been given to the other Members.
  41. Regular meetings of the Members will be held only as required.
  42. Voting
  43. Each Member will be entitled to cast votes on any matter based upon the proportion of that Member's Capital Contributions in the Company.
  44. Admission of New Members
  45. No new Members may be admitted into the Company.
  46. Voluntary Withdrawal of a Member
  47. A Member may not withdraw from the Company without the unanimous consent of the remaining Members. Any such unauthorized withdrawal will be considered a wrongful dissociation and a breach of this Agreement. In the event of any such wrongful dissociation, the withdrawing Member will be liable to the remaining Members for any damages incurred by the remaining Members including but not limited to the loss of future earnings.
  48. The voluntary withdrawal of a Member will have no effect upon the continuance of the Company.
  49. It remains incumbent on the withdrawing Member to exercise this dissociation in good faith and to minimize any present or future harm done to the remaining Members as a result of the withdrawal.
  50. Involuntary Withdrawal of a Member
  51. Events leading to the involuntary withdrawal of a Member from the Company will include but not be limited to: death of a Member; Member mental incapacity; Member disability preventing reasonable participation in the Company; Member incompetence; breach of fiduciary duties by a Member; criminal conviction of a Member; Operation of Law against a Member; or a legal judgment against a Member that can reasonably be expected to bring the business or societal reputation of the Company into disrepute. Expulsion of a Member can also occur on application by the Company or another Member, where it has been judicially determined that the Member: has engaged in wrongful conduct that adversely and materially affected the Company's business; has willfully or persistently committed a material breach of this Agreement or of a duty owed to the Company or to the other Members; or has engaged in conduct relating to the Company's business that makes it not reasonably practicable to carry on the business with the Member.
  52. The involuntary withdrawal of a Member will have no effect upon the continuance of the Company.
  53. Dissociation of a Member
  54. Where the Company consists of two or more Members, in the event of either a voluntary or involuntary withdrawal of a Member, if the remaining Members elect to purchase the interest of the withdrawing Member, the remaining Members will serve written notice of such election, including the purchase price and method and schedule of payment for the withdrawing Member's Interests, upon the withdrawing Member, their executor, administrator, trustee, committee or analogous fiduciary within a reasonable period after acquiring knowledge of the change in circumstance to the affected Member.
  55. Valuation and Distribution will be determined as described in the Valuation of Interest section of this Agreement.
  56. Any remaining Members retain the right to seek damages from a dissociated Member where the dissociation resulted from a malicious or criminal act by the dissociated Member or where the dissociated Member had breached their fiduciary duty to the Company or was in breach of this Agreement or had acted in a way that could reasonably be foreseen to bring harm or damage to the Company or to the reputation of the Company.
  57. A dissociated Member will only have liability for Company obligations that were incurred during their time as a Member. On dissociation of a Member, the Company will prepare, file, serve, and publish all notices required by law to protect the dissociated Member from liability for future Company obligations.
  58. Where any remaining Members have purchased the interest of a dissociated Member, the purchase amount will be paid in full, but without interest, within 90 days of the date of withdrawal. The Company will retain exclusive rights to use of the trade name and firm name and all related brand and model names of the Company.
  59. Right of First Purchase
  60. Where the Company consists of two or more Members, in the event that a Member's Interests in the Company is or will be sold, due to any reason, the remaining Members will have a right of first purchase of that Member's Interests.
  61. Assignment of Interest
  62. In the event that a Member’s Interests in the company is transferred or assigned as the result of a court order or Operation of Law, the trustee in bankruptcy or other person acquiring that Member's Interests in the Company will only acquire that Member's economic rights and interests and will not acquire any other rights of that Member or be admitted as a Member of the Company or have the right to exercise any management or voting interests.
  63. Valuation of Interest
  64. Where the Company consists of two or more Members, a Member's financial interest in the Company will be in proportion to their Capital Contributions, inclusive of any Additional Capital Contributions.
  65. In the absence of a written agreement setting a value, the value of the Company will be based on the fair market value appraisal of all Company assets (less liabilities) determined in accordance with generally accepted accounting principles (GAAP). This appraisal will be conducted by an independent accounting firm agreed to by all Members. An appraiser will be appointed within a reasonable period of the date of withdrawal or dissolution. The results of the appraisal will be binding on all Members.
  66. No allowance will be made for goodwill, trade name, patents or other intangible assets, except where those assets have been reflected on the Company books immediately prior to valuation.
  67. Dissolution
  68. The Company may be dissolved by a unanimous vote of the Members. The Company will also be dissolved on the occurrence of events specified in the Act.
  69. Upon Dissolution of the Company and liquidation of Company property, and after payment of all selling costs and expenses, the liquidator will distribute the Company assets to the following groups according to the following order of priority:
    1. in satisfaction of liabilities to creditors except Company obligations to current Members;
    2. in satisfaction of Company debt obligations to current Members; and then
    3. to the Member.
  70. Records
  71. The Company will at all times maintain accurate records of the following:
    1. Information regarding the status of the business and the financial condition of the Company.
    2. A copy of the Company federal, state, and local income taxes for each year, promptly after becoming available.
    3. Name and last known business, residential, or mailing address of each Member, as well as the date that person became a Member.
    4. A copy of this Agreement and any articles or certificate of formation, as well as all amendments, together with any executed copies of any written powers of attorney pursuant to which this Agreement, articles or certificate, and any amendments have been executed.
    5. The cash, property, and services contributed to the Company by each Member, along with a description and value, and any contributions that have been agreed to be made in the future.
  72. Each Member has the right to demand, within a reasonable period of time, a copy of any of the above documents for any purpose reasonably related to their interest as a Member of the Company, at their expense.
  73. Books of Account
  74. Accurate and complete books of account of the transactions of the Company will be kept in accordance with generally accepted accounting principles (GAAP) and at all reasonable times will be available and open to inspection and examination by any Member. The books and records of the Company will reflect all the Company’s transactions and will be appropriate and adequate for the business conducted by the Company.
  75. Banking and Company Funds
  76. The funds of the Company will be placed in such investments and banking accounts as will be designated by the Member. All withdrawals from these accounts will be made by the duly authorized agent or agents of the Company as appointed by unanimous consent of the Members. Company funds will be held in the name of the Company and will not be commingled with those of any other person or entity.
  77. Audit
  78. Any of the Members will have the right to request an audit of the Company books. The cost of the audit will be borne by the Company. The audit will be performed by an accounting firm acceptable to all the Members. Not more than one (1) audit will be required by any or all of the Members for any fiscal year.
  79. Tax Treatment
  80. This Company is intended to be treated as a disregarded entity, for the purposes of Federal and State Income Tax.
  81. Annual Report
  82. As soon as practicable after the close of each fiscal year, the Company will furnish to each Member an annual report showing a full and complete account of the condition of the Company including all information as will be necessary for the preparation of each Member's income or other tax returns. This report will consist of at least:
    1. A copy of the Company's federal income tax returns for that fiscal year.
  83. Goodwill
  84. The goodwill of the Company will be assessed at an amount to be determined by appraisal using generally accepted accounting principles (GAAP).
  85. Governing Law
  86. The Members submit to the jurisdiction of the courts of the Commonwealth of Virginia for the enforcement of this Agreement or any arbitration award or decision arising from this Agreement.
  87. Force Majeure
  88. A Member will be free of liability to the Company where the Member is prevented from executing their obligations under this Agreement in whole or in part due to force majeure, such as earthquake, typhoon, flood, fire, and war or any other unforeseen and uncontrollable event where the Member has communicated the circumstance of the event to any and all other Members and where the Member has taken any and all appropriate action to satisfy his duties and obligations to the Company and to mitigate the effects of the event.
  89. Forbidden Acts
  90. No Member may do any act in contravention of this Agreement.
  91. No Member may permit, intentionally or unintentionally, the assignment of express, implied or apparent authority to a third party that is not a Member of the Company.
  92. No Member may do any act that would make it impossible to carry on the ordinary business of the Company.
  93. No Member will have the right or authority to bind or obligate the Company to any extent with regard to any matter outside the intended purpose of the Company.
  94. No Member may confess a judgment against the Company.
  95. Any violation of the above forbidden acts will be deemed an Involuntary Withdrawal and may be treated accordingly by the remaining Members.
  96. Indemnification
  97. All Members will be indemnified and held harmless by the Company from and against any and all claims of any nature, whatsoever, arising out of a Member's participation in Company affairs. A Member will not be entitled to indemnification under this section for liability arising out of gross negligence or willful misconduct of the Member or the breach by the Member of any provisions of this Agreement.
  98. Liability
  99. A Member or any employee will not be liable to the Company or to any other Member for any mistake or error in judgment or for any act or omission believed in good faith to be within the scope of authority conferred or implied by this Agreement or the Company. The Member or employee will be liable only for any and all acts and omissions involving intentional wrongdoing.
  100. Liability Insurance
  101. The Company may acquire insurance on behalf of any Member, employee, agent or other person engaged in the business interest of the Company against any liability asserted against them or incurred by them while acting in good faith on behalf of the Company.
  102. Life Insurance
  103. The Company will have the right to acquire life insurance on the lives of any or all of the Members, whenever it is deemed necessary by the Company. Each Member will cooperate fully with the Company in obtaining any such policies of life insurance.
  104. Amendment of this Agreement
  105. No amendment or modification of this Agreement will be valid or effective unless in writing and signed by all Members.
  106. Title to Company Property
  107. Title to all Company property will remain in the name of the Company. No Member or group of Members will have any ownership interest in Company property in whole or in part.
  108. Miscellaneous
  109. Time is of the essence in this Agreement.
  110. This Agreement may be executed in counterparts.
  111. Headings are inserted for the convenience of the Members only and are not to be considered when interpreting this Agreement. Words in the singular mean and include the plural and vice versa. Words in the masculine gender include the feminine gender and vice versa. Words in a neutral gender include the masculine gender and the feminine gender and vice versa.
  112. If any term, covenant, condition or provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, it is the Members' intent that such provision be reduced in scope by the court only to the extent deemed necessary by that court to render the provision reasonable and enforceable and the remainder of the provisions of this Agreement will in no way be affected, impaired or invalidated as a result.
  113. This Agreement contains the entire agreement between the Members. All negotiations and understandings have been included in this Agreement. Statements or representations that may have been made by any Member during the negotiation stages of this Agreement, may in some way be inconsistent with this final written Agreement. All such statements have no force or effect in respect to this Agreement. Only the written terms of this Agreement will bind the Members.
  114. This Agreement and the terms and conditions contained in this Agreement apply to and are binding upon each Member's successors, assigns, executors, administrators, beneficiaries, and representatives.
  115. Any notices or delivery required here will be deemed completed when hand-delivered, delivered by agent, or seven (7) days after being placed in the post, postage prepaid, to the Members at the addresses contained in this Agreement or as the Members may later designate in writing.
  116. All of the rights, remedies and benefits provided by this Agreement will be cumulative and will not be exclusive of any other such rights, remedies and benefits allowed by law.
  117. Definitions
  118. For the purpose of this Agreement, the following terms are defined as follows:
    1. "Additional Contribution" means Capital Contributions, other than Initial Contributions, made by Members to the Company.
    2. "Capital Contributions" means the total amount of cash, property, or services contributed to the Company by any one Member.
    3. "Distribution" means a payment of Company profits to the Members.
    4. "Initial Contributions" means the initial Capital Contributions made by any Member to acquire an interest in the Company.
    5. "Member's Interests" means the Member's collective rights, including but not limited to, the Member's right to share in profits, Member's right to a share of Company assets on dissolution of the Company, Member's voting rights, and Member's rights to participate in the management of the Company.
    6. "Net Profits or Losses" means the net profits or losses of the Company as determined by generally accepted accounting principles (GAAP).
    7. "Operation of Law" means rights or duties that are cast upon a party by the law, without any act or agreement on the part of the individual, including, but not limited to, an assignment for the benefit of creditors, a divorce, or a bankruptcy.
    8. "Principal Office" means the office whether inside or outside the Commonwealth of Virginia where the executive or management of the Company maintain their primary office.
    9. "Voting Members" means the Members who belong to a membership class that has voting power. Where there is only one class of Members, then those Members constitute the Voting Members.

IN WITNESS WHEREOF the Member has duly affixed their signature under hand and seal on this ___________ day of ____________________, ______________.


___________________ (Member)

Last updated December 19, 2023

Written by

Reviewed by


Fact checked by

What is an LLC Operating Agreement?

A Limited Liability Company (LLC) Operating Agreement, also known as an LLC Company Agreement, is a legal document that establishes the rights and responsibilities of each LLC member and provides details such as: 

  • How decisions are made 
  • When meetings are held
  • How new members are admitted

To be an LLC member, an individual or corporation provides capital contributions in exchange for a percentage of ownership interest in the company. Use LawDepot’s LLC Operating Agreement template to describe each member’s contributions to your company and their role in internal management. 

Do I need an Operating Agreement for my LLC?

If you form an LLC in Delaware, Maine, Missouri, or New York, state laws require you to create an Operating Agreement (though you don’t need to file the document with the government). If your state does not require a written company agreement, you should keep in mind that this document is crucial to your company’s internal operations.

An Operating Agreement makes important company processes clear, including how to distribute profits and losses and which members have the authority to bind the company to legal contracts.

As such, multi-member LLCs can use this agreement to reduce the chances of disputes between members. Single-member LLCs may also benefit from an Operating Agreement, especially if the sole member relies on a manager to conduct company business. 

Without an LLC Operating Agreement, any legal actions against your company will rely on the provisions established by your state’s LLC code. Creating a company agreement allows you to exert more control over the rules that govern your company’s management. 

What does an LLC Operating Agreement include?

1. Company information

Include the company’s name, the industry your business operates in, a description of your services, and the main office address. Consider also writing a company purpose, which is a description of the goals your company sets out to achieve. 

2. Member details

Provide information on the roles and responsibilities of each member:

  • Their full name and address
  • Their membership class, duties, and rights (e.g., Class A members have full voting rights)
  • The value of their capital contributions (including cash, equipment, and sweat equity)
  • Whether the member can vote for additional contributions

Specify the rules that govern the members of your LLC: 

  • Whether a member can voluntarily leave the LLC 
  • How to admit new members

3. Management rules

Establish the rules for business management, including:

  • Who manages the company (the members or designated managers)
  • How often the members hold meetings
  • The weight of each member’s vote
  • Which actions require unanimous consent
  • If members can compete against the company
  • Who has the ability to sign contracts on behalf of the company

4. Accounting information

Describe the financial and administrative aspects of your LLC, including:

  • The business’s tax classification (either a disregarded entity or a corporation)
  • Which reports to include in the annual report to members (e.g., income statements and balance sheets)
  • The fiscal year-end for your company
  • Whether you will elect out of unified tax audit rules (if applicable)
  • How to distribute profits and losses to members (either in equal shares, a fixed percentage, or in proportion to capital contributions)
  • How to distribute assets when a member leaves or if the company dissolves

5. Other Details

Our template allows you to add a unique clause if needed (although most agreements don't need an additional clause). In this case, we'll give you tips for writing any extra terms or conditions. However, you may want a lawyer to review your document to ensure it accurately reflects your wishes.

To protect the interests of individual members, a company may require unanimous consent for certain actions—especially when a business decision has a significant impact on the success of the LLC. For example, members may require unanimous consent on critical issues, such as:

1. The assignment of ownership rights of company property

Members can prevent unauthorized behavior involving company property by requiring unanimous consent for selling, loaning, mortgaging, or trading company property. 

2. Incurring company liabilities over a fixed dollar amount

Expansion of the LLC may require significant financial investment with a large debt load. To limit the risk to individual members, they may set a dollar amount for acceptable levels of liability. Any liability over that amount would require the consent of all members. 

3. Incurring expenses over a fixed dollar amount

Members can control unauthorized spending by setting a limit on individual transactions. Any expenditures over this amount would require the consent of all members. 

4. Releasing any company claim except for payment in full

The company may have a legal claim against another person or business entity, such as when someone owes the company debt. In this case, it’s in the members’ best interest for these obligations to be paid in full. As such, members may require unanimous consent before releasing a claim for less than full consideration.

How do taxes work with an LLC?

Your LLC’s tax classification affects how you file federal income tax for your business. Contact a tax lawyer or a qualified accountant for help deciding which tax system works best for your business. 

The unified tax audit rules (facilitated by the IRS) automatically apply to any business entity that is taxed as a partnership. These rules do not apply to single-member LLCs or to those that elect to be taxed as corporations. 

Generally, an LLC that has at least two members is treated as a partnership for tax purposes. In this case, the business does not pay income tax but does pay employment and excise taxes. Each partner reports their earnings from the LLC on their personal tax return. 

A single-member LLC is treated as a disregarded entity (also known as a sole proprietorship). In this case, the owner reports the company’s income and expenses on their personal tax return. However, a single-member LLC can elect to be taxed as a corporation instead.

A corporation gets taxed at the company level, and each member is responsible for paying income tax on any distributions. In effect, this creates two levels of taxation (i.e., a double tax). 

How do I change the terms in an LLC Operating Agreement?

You can change the terms of an LLC Operating Agreement only if the changes are documented in writing and signed by all the members of the LLC. Use LawDepot’s Contract Addendum to make changes to your existing Operating Agreement. 

How do I file my LLC Operating Agreement?

Although a few states require LLC members to create an Operating Agreement, you don’t need to file this internal document with the government. Instead, states require you to file your company’s Articles of Organization and annual reports.

Refer to your state’s code for the requirements of forming an LLC

Related Documents:

  • Articles of Organization: Compile the basic information needed to register your business as an LLC.
  • Business Plan: Outline your company's values, future goals, financial projections, marketing and sales plan, and employee/management details.
  • Contract Addendum: Make changes to your company agreement without invalidating the original contract. 
  • One Page Business Plan: A succinct, one-page version of our Business Plan to help you outline your business's goals and how you plan to achieve them.
Sample Limited Liability Company LLC Operating Agreement Thumbnail


LLC Operating Agreement

Personalize your LLC Operating Agreement template.

Print or download in minutes.

Create your free LLC Operating Agreement today
This document preview is formatted to fit your mobile device. The formatting will change when printed or viewed on a desktop computer.
Loading ...
Loading ...

Note: Your initial answers are saved automatically when you preview your document.
This screen can be used to save additional copies of your answers.