Lesson 8 of 15
Operating agreements and internal documents
Most states do not require you to file an operating agreement, and a few require you to have one. Either way, going without it is a bad idea.
What it should cover
- Members, ownership percentages and initial contributions
- How profits and losses are allocated and distributed
- Management structure and who can bind the company
- Voting thresholds for ordinary and major decisions
- Rules for admitting new members and transferring interests
- What happens on death, exit, deadlock or dissolution
- Bookkeeping, tax year and record-keeping duties
Single-member LLCs still need one
For a one-owner company the agreement is short, but it evidences the separation between you and the business, which supports your liability protection. Banks also ask for it regularly.
Other internal records
Keep a membership ledger, records of contributions and distributions, and written consents for significant decisions. These are cheap to maintain and expensive to reconstruct later.
Without an agreement, your state's default rules apply, and those often split profits and control equally regardless of what the owners actually agreed.
Frequently asked questions
Does it get filed with the state?
Generally no. It is an internal document kept in your records.
Can we change it later?
Yes, using whatever amendment procedure the agreement itself sets out, normally in writing and signed by the members.
Prefer to have someone handle the filing?
You can file directly with the state using the steps above. If you would rather have Gullia Filing prepare and file your formation documents, run the name check and act as your registered agent, we handle the process end to end.