How to Write a US LLC Operating Agreement — Template Guide (2026)

What an Operating Agreement Actually Does

An LLC is created by state law when you file Articles of Organization. The state gives your LLC default rules — but those defaults are generic. The Operating Agreement replaces those defaults with your specific rules.

Without an Operating Agreement, your Wyoming or Delaware LLC may default to rules requiring all members to approve every decision unanimously, distributing profits equally regardless of ownership percentage, and dissolving automatically if a member dies or files for bankruptcy. Almost certainly not what you want.

Beyond internal governance: the Operating Agreement is the document banks ask for when opening accounts, investors review before writing checks, and courts examine when disputes arise.

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Single-Member Operating Agreement: Core Clauses

Preamble and Formation: Name the LLC exactly as registered with the Secretary of State. State the date of formation and the state of formation. Identify the registered agent and registered office address. Identify the sole member (you) with your address.

Membership and Capital: Confirm 100% membership interest belongs to the sole member. Record your initial capital contribution (even if $1 or $0). Establish that the LLC is a disregarded entity for US federal income tax (profits and losses reported on your personal return — Schedule C or Schedule E).

Management: State that the LLC is member-managed (you control all operations). Grant yourself authority to: sign contracts, open bank accounts, hire staff, apply for licences, make all operational decisions. This clause is what Mercury Bank reads to confirm you have authority to open the account.

Distributions: At your discretion as sole member. No restrictions on timing or amount (provided the company remains solvent — distributions cannot leave the LLC unable to pay its debts).

Tax Treatment: Explicitly state the LLC is treated as a disregarded entity (single-member) for US federal income tax. State your intention to comply with all applicable US tax filing requirements — including Form 5472 (for foreign-owned single-member LLCs), filed annually by March 15.

Dissolution: The LLC dissolves upon your written decision, your death (unless your estate continues it), or as required by state law. Upon dissolution: settle all debts, then distribute remaining assets to the member.

Governing Law: The laws of the state of formation (Wyoming, Delaware, etc.) govern this agreement.

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Multi-Member Operating Agreement: Additional Clauses

Everything above, plus:

Membership Interests and Capital Table: List each member's name, address, and percentage interest. Record each member's initial capital contribution. Note that ownership percentage does not automatically equal profit allocation (they can be different — unusual but permitted).

Profit and Loss Allocation: Standard: allocate proportionate to ownership percentage. Alternative: preferred return to capital-providing members before pro-rata distribution. Any allocation that is not pro-rata should be carefully drafted to avoid "substantial economic effect" issues under US partnership tax rules (get a US tax advisor to review).

• Voting Rights:
• Standard: votes weighted by ownership percentage. Simple majority for routine decisions. Supermajority (75% or unanimity) for major decisions:
• Admitting a new member
• Amending the Operating Agreement
• Dissolving the LLC
• Selling substantially all assets
• Taking on debt above a defined threshold
• Changing the LLC's business purpose

Management Structure: Member-managed: All members participate in day-to-day management. Best for small founder teams. Manager-managed: One or more named Managers (who may or may not be members) run the LLC. Members vote on fundamental matters only. Best when you have passive investor members.

Admitting New Members: Requires unanimous consent of all existing members (standard). New member contributes capital; existing members are diluted proportionately (or by agreed formula).

Transfer Restrictions: Members cannot freely transfer their interest — must first offer to sell to existing members at the same price and terms (right of first refusal). Transfer to non-members requires unanimous consent of remaining members.

Buyout on Exit, Death, or Disability: If a member wants to leave: the LLC (or other members) has the option to buy their interest at a defined price. Valuation method: book value, fair market value (independent appraiser), or a formula (e.g., 5× trailing EBITDA).

If a member dies: their interest passes to their estate. The estate has the economic rights but not management rights — they cannot vote or participate in management without being admitted as a member (requiring consent of remaining members).

Non-Compete and Non-Solicitation: Departing members typically agree not to compete with the LLC's business in the same geographic area for 12–24 months. And not to solicit the LLC's clients or employees.

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Common Mistakes in Operating Agreements

Copying a template without reading it. State-specific rules vary. A Wyoming template used for a Delaware LLC may have incorrect references to state law.

Not having one at all. "We're just two friends — we don't need paperwork." Friends become strangers in business disputes. Get the agreement before you need it.

Using a word mark as your "equity." Verbal equity agreements ("I'll give you 10%" in a text message) create equitable interests that can be enforced by courts — against you. Require formal Operating Agreement amendments for any equity change.

Not addressing what happens when someone wants to leave. Without a buyout mechanism: a departing member keeps their interest (and continues to receive distributions) while doing no work. Define exit procedures before anyone wants to use them.

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Where to Get Your Operating Agreement

• Free templates:
• Wyoming Secretary of State website: provides guidance, not templates
• LegalZoom, Rocket Lawyer: $30–100 for downloadable templates
• Law Insider, Docracy: open-source legal template libraries

Formation service-included: Northwest Registered Agent, ZenBusiness, Stripe Atlas, Incfile — all include basic Operating Agreements.

Custom-drafted (recommended for multi-member): US business lawyer: $500–2,000 for a customised multi-member Operating Agreement. Non-negotiable if you have multiple founders with unequal contributions, investor members, or complex profit-sharing arrangements.

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FAQs

Does the Operating Agreement need to be filed with the state? In most states: No. Wyoming, Delaware, Nevada — not filed. It is an internal document. States that require filing: California (publication requirement), others. Check your specific state.

Can I change the Operating Agreement after forming the LLC? Yes — via amendment, following the amendment procedure in the agreement itself (typically unanimous member consent). Document amendments in writing, have all members sign, keep in company records.

What happens if we never draft an Operating Agreement and later there's a dispute? State default rules apply. Courts have applied state default rules in ways that surprised (and financially harmed) LLC members who assumed their informal agreements were binding. Default rules are genuinely not designed for the complexity of most founder relationships.

Is an Operating Agreement different from the Articles of Organization? Yes. Articles of Organization is the public formation document filed with the state (creating the LLC). The Operating Agreement is the private governance document that controls how the LLC operates internally. Both are needed.

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