A Sample of an Operating Agreement for an LLC

By Larissa Bodniowycz, J.D.

A Sample of an Operating Agreement for an LLC

By Larissa Bodniowycz, J.D.

There is no set or required form for an LLC's Operating Agreement. What an LLC's operating agreement looks like depends on the individual LLC's structure and business plans.

Businesswoman and businessman looking over document at desk in front of laptop with glasses set to the side

The following are examples of some of the most common sections included in a simple, single-member LLC agreement. You should not copy any of them verbatim, but use them as a guide for the types of issues you should consider and types of clauses you might want to include in your own LLC's operating agreement.

Introductory Clause

An operating agreement is a contract. As with all contracts, it should begin by introducing the parties mentioned in the agreement. A common introductory clause is:

This Operating Agreement (this “Agreement") of Meghan's Moving, LLC, a New Mexico limited liability company (the “Company"), is entered into as of the date set forth below, by and among the Company, the Initial Members (as defined below), and each other person or entity who after the date hereof becomes a Member (as defined below) and a party to this Agreement by executing an amendment to this Agreement.

Members

Operating agreements should disclose who the initial members of the LLC are, how the company can add members, how the LLC will count members' votes, and any other rules relating to member voting. Some example provisions related to LLC membership are:

  • Initial Member. The name and the business, residence, or mailing address of the Member is: Meghan Mover, 888 Main Street, Santa Fe, New Mexico 87501. The Member owns 100 percent of the membership interests of the Company.
  • Additional Members. One or more additional members may be admitted to the Company with the consent of the Member. Prior to the admission of additional members, the Member shall amend this Agreement or adopt a new operating agreement to make such changes as the Member shall determine to reflect the fact that the Company is taking on additional members. Each additional member shall execute and deliver a supplement or counterpart to this Agreement, as necessary.
  • Member Voting. Members shall have voting power equal to their share of membership interests in the Company.

Management

One of the most important functions of an LLC operating agreement is to set out who will manage the LLC and any rules and restrictions governing their management. Example provisions related to management are:

  • Manager. The Company shall be member-managed. Meghan Mover is hereby appointed as the Manager of the Company. The Manager shall have complete authority to manage the operations and affairs of the Company and to make all decisions regarding the business of the Company.
  • Officers. The Manager may, from time to time, designate one or more officers with such titles as may be designated by the Manager to act in the name of the Company with such authority as may be delegated to such officers by the Manager (each such designated person, an “Officer").
  • Future additional managers. If the Company shall in the future have more than one Manager, the Managers collectively shall be deemed a Board of Managers.

Capital Contributions and Distributions

The operating agreement should include provisions related to the capital contributions of its members—in other words, how much of their own money or other resources, each member contributes to help the LLC operate. It should also indicate the criteria for making distributions, or payments of a portion of the LLC's profits, to the members. Examples of provisions related to capital contributions and distributions are:

  • Capital contributions. The Member hereby acknowledges that she has contributed to the Company such cash, property, or services as determined by the Member in her sole discretion to be required.
  • Additional contributions. The Member may from time to time and at any time contribute cash, property, or services to the Company as the Member may determine in her sole discretion.
  • Distributions. Distributions shall be made to the Member at the times and in the amounts determined by the Member.

Limitation of Liability

One of the primary reasons to form an LLC is to take advantage of the limited liability it offers its members. It is usually advisable for an LLC to include provisions related to limited liability in its operating agreement to reinforce the limited liability of its members. An example provision is:

Except as otherwise required by applicable law, the debts, obligations, and liabilities of the Company, whether arising in contract, tort, or otherwise, shall be solely the debts, obligations, and liabilities of the Company, and neither the Member(s) nor Manager(s) shall be obligated personally for any such debt, obligation, or liability of the Company solely by reason of acting as a member or participating in the management of the Company.

Dissolution

Most LLC operating agreements set out the conditions under which the LLC will be dissolved. An example of a simple dissolution clause is:

The Company shall dissolve, and its affairs shall be wound up, upon the first to occur of the following: (i) the unanimous written consent of all then existing Members; or (ii) any other event or circumstance giving rise to the dissolution of the Company under the New Mexico Limited Liability Act (NMLLC).

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