Definition
The Operating Agreement is the contract that governs how an LLC runs internally: who owns what, who decides, how profits are shared and what happens when a member leaves.
Is it required?
A few states require it, most do not, and it is usually not filed with the state. It is still strongly recommended, including for a single-member LLC.
When will you be asked for it?
The most common cases:
- Opening a business bank account
- Verification by a payment platform
- A new member or investor joining
- A dispute between members
What it contains
The members and their ownership, how the company is managed (by its members or by a manager), voting rules, profit distribution, transfer of membership interests and dissolution.
This article is for information only and is not legal or tax advice. The rules mentioned may have changed since the update date.
