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What an operating agreement is
Your Articles of Organization create the LLC with the state. The operating agreement governs how it runs. It’s a private contract among the members, usually not filed anywhere, but it’s the document a bank, lender, buyer or judge will ask for when questions come up about who owns and controls the company.
Is an operating agreement required?
Some states require one by law. New York, for example, requires members to adopt a written operating agreement, which may be signed before, at or within 90 days after filing the articles of organization (LLC Law § 417). Where the law doesn’t require one, it’s still effectively required in practice:
- Banks often ask for it to open a business account.
- Lenders review it to see who can borrow for the LLC.
- Without one, your state’s default rules decide disputes for you.
Operating agreement checklist
Basics
- LLC legal name, state and formation date
- Principal office and registered agent
- Purpose of the business
- Term (perpetual or a set end date)
Ownership
- Members’ names and addresses
- Capital contributions (cash, property, services) and their value
- Ownership percentages or units
- Whether and how members must contribute more later
Management
- Member-managed or manager-managed
- Who can sign contracts, open bank accounts and borrow
- Voting rights and which decisions need unanimous consent
- Meetings (if any) and written consent in lieu of meetings
Money
- How profits and losses are allocated
- When and how distributions are made
- Tax classification and any S corp election
- Who keeps the books and fiscal year
Changes
- Adding new members
- Transfers of ownership and right of first refusal
- What happens if a member dies, divorces, becomes disabled or wants out (buy-sell terms)
- How the agreement is amended
Ending the LLC
- Events that trigger dissolution
- How assets are distributed when winding up
- Dispute resolution (mediation, arbitration, venue)
Single-member LLC operating agreements
A one-owner agreement is shorter, but it matters: it records that the LLC is a separate entity, confirms your authority to sign, states how you’re taxed, and — most overlooked — names who can step in to run or wind down the business if you die or become incapacitated.
Common mistakes
- Ownership percentages that don’t match what each member actually contributed.
- No buy-sell terms — so a departing member can’t be bought out at a fair, agreed price.
- Not updating it after adding a member, changing management or electing S corp status.
- Copying a template from another state without checking your state’s rules.
- Never signing it.
Templates and attorney help
Most single-member LLCs start from a template. Online legal services let you fill one in, sign it electronically and ask an attorney questions — useful when you have several members, unequal contributions or investors. Compare what a membership costs with a one-off attorney review before you subscribe.
Rocket Lawyer
From $149/yr or $34.99/mo
- LLC operating agreement and other templates, with e-signature
- Written answers from attorneys within 1 business day
- Free 7-day trial
Watch out: Membership renews automatically after the trial — cancel if you only need one document
Rocket Lawyer’s plans start at $149 a year or $34.99 a month, with a free 7-day trial (pricing). The membership renews automatically — cancel during the trial if you only need one document.
Finished your agreement?
Next: get your EIN, open a business bank account and cover the risks your LLC doesn’t.
Banks that ask for it
Mercury
$0/mo
- $0 monthly fee, no minimum balance, no opening fees
- Free ACH and free domestic wires, sent and received
- Free outgoing USD international wires
Watch out: No cash deposits
Relay
$0/mo (Grow $30, Scale $120)
- $0 Starter plan with no minimum balance
- Up to 20 checking accounts on Starter (Profit First friendly)
- Cash deposits at Allpoint+ ATMs and Green Dot retailers
Watch out: Wire and same-day ACH fees on Starter
Bluevine
$0/mo (Plus $30, Premier $95)
- Interest on checking: 1.3% APY on Standard (with $500 card spend or $2,500 in customer payments a month)
- $0 Standard plan, no minimum balance
- 37,000+ fee-free MoneyPass ATMs
Watch out: Outgoing domestic wires cost $15 on Standard
General information, not legal, tax or financial advice. Verified October 18, 2026. We may earn a commission if you sign up through our links, at no cost to you. How we’re funded.
Frequently asked questions
What is an LLC operating agreement?
The internal contract among an LLC’s owners (members) that sets out ownership, management, how money is split, and what happens when someone joins, leaves or the business closes. It isn’t usually filed with the state.
Is an operating agreement required?
It depends on the state. New York’s LLC Law § 417 requires members to adopt a written operating agreement, within 90 days after filing the articles of organization. Many other states don’t require one by statute — but banks, lenders and courts often expect one.
Does a single-member LLC need an operating agreement?
It’s strongly recommended. It documents that the LLC is separate from you (helpful if your liability protection is ever challenged), shows banks who can sign, and sets out what happens to the business if you die or become incapacitated.
Do I file the operating agreement with the state?
Generally no. Keep it with your LLC records. Banks may ask to see it when you open an account.
Can I write my own operating agreement?
Yes. Many owners start from a template and adapt it. For multi-member LLCs, unequal contributions or investors, having a business attorney review it is worth the cost.
What happens if an LLC has no operating agreement?
Your state’s default LLC rules apply — which may split profits or voting in ways you didn’t intend, and may not address buyouts or a member’s death.
Your LLC setup checklist
- Get a free EINFrom the IRS, in minutes online.
- Open a business bank accountKeep LLC money apart from yours to protect the liability shield.
- Get business insuranceCover what the LLC itself doesn’t protect.
- Plan your taxesKnow your tax status and federal due dates.
- Track state deadlinesFree reminders before each filing.
Everything in one list: printable LLC compliance checklist · live deadline calendar.