LLC Operating Agreement Generator

It depends on the state. Operating agreements are legally required in California (Corp. Code §17701.10), Delaware (§18-101), Maine (31 M.R.S. §1521), Missouri (§347.081), and New York (LLC Law §417). In all other states, operating agreements are optional — but strongly recommended. Without one, your LLC is governed by your state's default LLC statutes, which may not reflect your intentions (especially regarding profit distribution, voting rights, and dissolution procedures). Banks, investors, and potential partners frequently require an operating agreement before doing business with an LLC.

Five states legally require LLCs to have an operating agreement: California (Corp. Code §17701.10 — requires a written agreement for LLCs with multiple managers or members), Delaware (§18-101 — required; may be oral or written), Maine (31 M.R.S. §1521 — required), Missouri (§347.081 — required), and New York (LLC Law §417 — required within 90 days of formation). New York additionally requires that the operating agreement address who manages the LLC if a member becomes incapacitated. Even in states where not required, having a written operating agreement is considered best practice and is required by most banks, investors, and potential partners.

A complete LLC operating agreement should include: (1) member information — names, capital contributions, and ownership percentages; (2) management structure — member-managed vs. manager-managed; (3) voting rights — percentage required for major decisions; (4) profit and loss allocation — how profits and losses are distributed among members; (5) distributions — when and how cash is distributed; (6) transfer restrictions — right of first refusal, approval requirements for new members; (7) buy-sell provisions — what happens when a member wants to exit; (8) dissolution — how the LLC winds down; (9) governing law — which state's LLC statutes apply. For single-member LLCs, also include language establishing the LLC as a separate legal entity from the owner.

Yes — and single-member LLCs should have operating agreements even though only one member exists. Key reasons: (1) it helps maintain the LLC's liability protection by demonstrating the LLC is a separate legal entity from the owner; (2) banks and lenders often require one to open a business account; (3) it is required in California regardless of membership size; (4) it establishes succession rights — what happens to the LLC if the sole member dies or becomes incapacitated; (5) it documents the member's capital contribution and tax election. A single-member operating agreement is simpler than a multi-member agreement but covers the same critical structural elements.

Without an operating agreement, your LLC defaults to your state's LLC statutes, which often produce undesirable outcomes: (1) profit distributions default to equal shares among members regardless of capital contributions in many states; (2) management defaults to all-member management, which can cause deadlock; (3) a single member's exit may trigger dissolution in some states; (4) courts may be less likely to respect the LLC's separate entity status (increasing piercing the corporate veil risk); (5) your bank may refuse to open an account; (6) investors and partners may decline to work with you. In California, New York, and other states that require operating agreements, operating without one can expose members to additional legal risk.