Free Single-Member LLC Operating Agreement
Keep everyone's best interests in mind with an LLC Operating Agreement.
This agreement establishes the rules for your single-member LLC.

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Your Single-Member LLC Operating Agreement

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Single-Member LLC Operating Agreement Page of
Page of

OPERATING AGREEMENT
 of
__________

This Operating Agreement (the "Agreement") made and entered into this ________ day of ________________, ________ (the "Execution Date"),

BY:

__________ of __________

BACKGROUND:

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

IN CONSIDERATION OF the formation of the Company and other valuable consideration, the receipt and sufficiency of which is acknowledged, the Sole Member resolves as follows:

  1. Formation
  2. By this Agreement, the Sole Member forms a Limited Liability Company (the "Company") in accordance with the laws of the State of Alabama. The rights and obligations of the Sole Member will be as stated in the Alabama Limited Liability Company Act (the "Act") except as otherwise provided in this agreement.
  3. Name
  4. The name of the Company is __________
  5. Purpose
  6. ____________________________________________________________
  7. Term
  8. The Company will continue until terminated as provided in this Agreement or may dissolve under conditions provided in the Act.
  9. Place of Business
  10. The Principal Office of the Company is located at __________ or such other place as the Sole Member may from time to time designate.
  11. Capital Contributions
  12. The following table shows the Initial Contributions of the Sole Member. The Sole Member resolves to make the Initial Contributions to the Company in full, according to the following terms:

    Member

    Contribution Description

    Value of
    Contribution

    __________

    		 

    $________________


  13. Allocation of Profits/Losses
  14. Subject to the other provisions of this Agreement, the Net Profits or Losses, for both accounting and tax purposes, accrue to and are borne by the Sole Member.
  15. Nature of Interest
  16. The Sole Member's interest in the Company will be considered personal property.
  17. Capital Accounts
  18. The Sole Member will maintain a capital account (the "Capital Account") and the Initial Contribution will be credited to this account. Any Additional Contributions made by the Sole Member will be credited to the Capital Account.
  19. Interest on Capital
  20. No borrowing charge or loan interest will be due or payable to the Sole Member on the Capital Contribution inclusive of any Additional Contributions.
  21. Decision Making by Sole Member
  22. All decision making authority for the Company is vested in the Sole Member. No meetings will be held and important decisions of the Sole Member will be recorded by resolution.
  23. Management
  24. Management of the Company is vested in the Sole Member.
  25. In the event that the Sole Member becomes incapacitated and is unable to manage the Company, all decision making authority for the Company will pass to _________________________ until such time as the Sole Member is capable of resuming management of the Company.
  26. Authority to Bind Company
  27. The Sole Member has the authority to bind the Company in contract.
  28. Duty of Loyalty
  29. The  Sole 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. The Company will not have any right to that opportunity or any income derived from that opportunity.
  30. Duty to Devote Time
  31. The Sole Member will devote such time and attention to the business of the Company as reasonably required for the conduct of the Company's business.
  32. Admission of New Members
  33. No new members may be admitted into the Company.
  34. Voluntary Withdrawal
  35. The Sole Member has the right to voluntarily withdraw from the Company.
  36. The voluntary withdrawal of the Sole Member will result in the dissolution of the Company.
  37. Involuntary Withdrawal
  38. Events leading to the involuntary withdrawal of the Sole Member from the Company will include but not be limited to: death, permanent mental incapacity; permanent disability preventing reasonable participation in the Company; breach of fiduciary duties to the Company; or criminal conviction.
  39. The involuntary withdrawal of the Sole Member will result in the dissolution of the Company.
  40. Valuation of Interest
  41. In the absence of a written statement 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 appointed by the Sole Member. 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 the Sole Member.
  42. 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.
  43. Dissolution
  44. The Company may be dissolved by resolution of the Sole Member. The Company will also be dissolved on the occurrence of events specified in the Act.
  45. 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 the Sole Member;
    2. in satisfaction of Company debt obligations to the Sole Member; and then
    3. to the Sole Member.
  46. Records
  47. 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 the Sole Member, as well as the date that person became the Sole 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 the Sole Member, along with a description and value, and any contributions planned to be made in the future.
  48. Books of Account
  49. 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 the Sole 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.
  50. Banking and Company Funds
  51. The funds of the Company will be placed in such investments and banking accounts as will be designated by the Sole Member. All withdrawals from these accounts will be made by the duly authorized agent or agents of the Company as appointed by resolution of the Sole Member. Company funds will be held in the name of the Company and will not be commingled with those of any other person or entity.
  52. Audit
  53. The Sole Member has 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 appointed by resolution of the Sole Member. Not more than one audit will be required for any fiscal year.
  54. Tax Treatment
  55. This Company is intended to be treated as a disregarded entity, for the purposes of federal and state income tax.
  56. Annual Report
  57. As soon as practicable after the close of each fiscal year, the Company will furnish to the Sole 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 the Sole 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.
  58. Goodwill
  59. The goodwill of the Company will be assessed at an amount to be determined by appraisal using generally accepted accounting principles (GAAP).
  60. Governing Law
  61. The Sole Member submits to the jurisdiction of the courts of the State of Alabama for the enforcement of this Agreement or any arbitration award or decision arising from this Agreement.
  62. Force Majeure
  63. The Sole 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 Sole Member has communicated the circumstance of the event to any interested parties and where the Sole Member has taken any and all appropriate action to satisfy their duties and obligations to the Company and to mitigate the effects of the event.
  64. Forbidden Acts
  65. The Sole Member may not do any act in contravention of this Agreement.
  66. The Sole Member may not permit, intentionally or unintentionally, the assignment of express, implied or apparent authority to act on behalf of the Company to any third party.
  67. The Sole Member may not do any act that would make it impossible to carry on the ordinary business of the Company.
  68. The Sole Member will not 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.
  69. The Sole Member may not confess a judgment against the Company.
  70. Any violation of the above forbidden acts will be deemed an involuntary withdrawal.
  71. Indemnification
  72. The Sole Members will be indemnified and held harmless by the Company from and against any and all claims of any nature, whatsoever, arising out of the Sole Member's participation in Company affairs. The Sole Member will not be entitled to indemnification under this section for liability arising out of gross negligence or willful misconduct of the Sole Member or the breach by the Sole Member of any provisions of this Agreement.
  73. Liability
  74. The Sole Member or any employee will not be liable to the Company 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 by the Company. The Sole Member or employee will be liable only for any and all acts and omissions involving intentional wrongdoing.
  75. Liability Insurance
  76. The Company may acquire insurance on behalf of the Sole Member, or on behalf of any 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.
  77. Life Insurance
  78. The Company will have the right to acquire life insurance on the life of the Sole Member, whenever it is deemed necessary by the Company. The Sole Member will cooperate fully with the Company in obtaining any such policies of life insurance.
  79. Amendment of this Agreement
  80. No amendment or modification of this Agreement will be valid or effective unless in writing and signed by the Sole Member.
  81. Title to Company Property
  82. Title to all Company property will remain in the name of the Company. The Sole Member will not have any ownership interest in Company property in whole or in part.
  83. Miscellaneous
  84. Time is of the essence in this Agreement.
  85. This Agreement may be executed in counterparts.
  86. Headings are inserted for convenience only and will not 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.
  87. 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 Sole Member's 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.
  88. This Agreement, together with all applicable laws, contains the entire rules for the operation of the Company as resolved by the Sole Member. The written terms of this Agreement will bind the Sole Member.
  89. This Agreement and the terms and conditions contained in this Agreement apply to and are binding upon the Sole Member's successors, assigns, executors, administrators, beneficiaries, and representatives.
  90. Any notices or delivery required here will be deemed completed when hand-delivered, delivered by agent, or seven days after being placed in the post, postage prepaid, to the Sole Member at the addresses contained in this Agreement or as the Sole Member may later designate in writing.
  91. 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.
  92. Definitions
  93. 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 the Sole Member to the Company.
    2. "Capital Contribution" means the total amount of cash, property, or services contributed to the Company by the Sole Member.
    3. "Distributions" means a payment of Company profits to the Sole Member.
    4. "Initial Contribution" means the initial Capital Contributions made by the Sole Member to acquire an interest in the Company.
    5. "Net Profits or Losses" means the net profits or losses of the Company as determined by generally accepted accounting principles (GAAP).
    6. "Principal Office" means the office whether inside or outside the State of Alabama where the executive or management of the Company maintain their primary office.

IN WITNESS WHEREOF the Sole Member has duly affixed their signature under hand and seal on this ________ day of ________________, ________.

_______________________________
WITNESS:  ______________________

_______________________________
______________________(Member)
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Last updated August 07, 2025

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What is a Single-Member LLC Operating Agreement?

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A Single-Member LLC Operating Agreement is an internal management document for a limited liability company (LLC) with a single owner, also known as the sole member. The operating agreement outlines the company's purpose, daily operations, the members’ contributions, and dissolution procedures.

By listing the capital assets the sole member has contributed to the company, the Operating Agreement safeguards the member's personal liability for business debts and obligations. Only the company's assets will be available to creditors if the company becomes insolvent. The member’s personal property is safe because the LLC is a separate legal entity.

You can create a Single-Member LLC Operating Agreement:

  • When forming a new single-member LLC
  • At any point during the lifespan of an existing single-member LLC, if it wasn't created at the business's inception 
For LLCs with more than one member, use LawDepot’s LLC Operating Agreement or Partnership Agreement. 

Does a Single-Member LLC Need an Operating Agreement?

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Although most US states don't legally require a Single-Member LLC Operating Agreement, drafting this document is a highly recommended proactive measure to safeguard your business and your personal interests as the sole member. 

California, Missouri, and New York are among the states that require LLCs to have a formal Operating Agreement. Additionally, Maine mandates a comparable document known as a limited liability company agreement.

Because no partners are involved, some single-member LLC owners overlook creating an Operating Agreement. However, outlining your business's operational procedures in a written agreement can streamline your activities and offer valuable extra layers of protection.

Benefits of a Single-Member LLC Operating Agreement

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It’s best practice as a business owner to have the appropriate documentation. A Single-Member LLC Operating Agreement has the following benefits for you and the company:

Protects limited liability status

This agreement clearly establishes that your LLC and you, as the sole member, are separate legal entities. It safeguards your personal assets from business-related legal issues or financial difficulties by setting out which assets are owned by the business and which are not.

Establishes business procedures

A well-written Single-Member LLC Operating Agreement defines all essential business operation procedures, including your responsibilities as the sole member, how the LLC is managed, and who holds decision-making authority.

Facilitates business relationships

A Single-Member LLC Operating Agreement can offer potential investors clarity and insight into your operations. These details can build trust to encourage business relationships and investment opportunities by demonstrating the business's legitimacy to potential investors and financial institutions.

When seeking to attract financial backing from investors or banks, it will help to present the LLC Operating Agreement and a Business Plan to show how the company will be run.

Provides clarity and resolution

A Single-Member LLC Operating Agreement may create a framework for resolving disputes or disagreements between the company and a customer or client. Without an Operating Agreement, the court may default to a different set of state laws or corporation regulations that don’t provide the same safeguards for the LLC.

Simplifies succession planning

A Single-Member LLC Operating Agreement can outline your wishes about what happens to the business if you die or become incapacitated. It can simplify the process of transferring ownership or dissolving the company.  

Enhances legitimacy

An official Single-Member LLC Operating Agreement demonstrates professionalism and organization. Clear documentation of your company’s operations enhances your business's legitimacy to banks, investors, and customers, encouraging potential growth for the company. 

How to write a Single-Member LLC Operating Agreement

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LawDepot's step-by-step questionnaire gathers the necessary information to customize your company's Single-Member LLC Operating Agreement. You’ll be prompted to include the following details to complete your document: 

Company details

First, provide your company’s essential information, starting with where the company is or will be registered. Next, include details such as the company name, location, industry, purpose, and whether it will offer professional services. Clearly state the company's purpose in complete sentences using the term the Company. Also, specify the market sector in which your company will operate. 

It’s important to note that your company might need a license if it provides professional services.

Sole member and management details

Identify the name and address of your company's sole member. Then, specify who will manage the company and whether their role is temporary or permanent. Designating a temporary manager or a trusted associate can provide security by allowing someone else to make decisions if you become incapacitated.

Capital contributions

When you first create an LLC, you may provide an initial capital contribution to fund it. Capital contributions refer to any cash, equipment, knowledge, or services you invest in your LLC. Outline the total value of the investment with an accurate description of the contribution in the contract.

Tax classification

Next, choose how the company should be classified for tax purposes. This includes the following options: 

  • A disregarded entity is a tax option unique to single-member LLCs. With this option, the government disregards the company for tax purposes and treats the business profits as personal income. This is also known as “pass-through” taxation, as the income passes through the disregarded entity to be taxed once as the owner's income. This is typically how most single-member LLCs choose to be taxed.
  • Alternatively, an LLC may choose to be taxed as a corporation. This involves double taxation, as the corporation will incur corporate taxes on its profits. Then the sole member will incur personal income tax on any distributions the corporation makes to them. However, if corporate tax rates are lower than the personal income tax rate and any net profits are reinvested back into the business, this may be a tax-efficient option.

For further information on choosing a tax classification, speaking to a lawyer or chartered professional accountant is recommended.

Administrative details

Finally, determine what information you want to include in your annual report, such as an income statement, balance sheet, or cash flow statement. 

Consider including information on profit allocation, which details how the company will distribute profits. In a single-member LLC, profits are typically assigned to the sole member. 

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