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LLC Operating Agreement

For forming an LLC — single-member or multi-member. Covers ownership percentages, profit distribution, management roles, voting rights, and what happens if a member leaves.

Drafted by a Harvard Law entertainment attorney.

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Is this the right contract for your business?

This contract is built for the owners of a limited liability company. It fits single-owner and multi-owner companies that want clear rules for ownership, money, management, voting, and what happens if a member joins, leaves, or the company winds down.

Good fit for

  • Business founders forming an LLC
  • Company members and owners
  • Partners starting a venture together
  • Single-owner companies setting their own rules
  • Family or group businesses

You may also need

Before you start

It helps to have these details on hand before you create your contract:

  • The company name and state
  • The members and their ownership percentages
  • Each member's capital contribution
  • How profits and losses are split
  • The management structure and voting rules
  • The tax classification
  • Rules for transferring ownership or removing a member
  • How the company can be dissolved

What's Inside This Contract

Formation, purpose, and term

Sets the company name, principal office, business purpose, and duration.

Tax classification

Sets how the company is treated for federal tax purposes and tax filing duties.

Members and ownership

Lists the members, ownership interests, and transfer restrictions.

Management and voting

Sets who manages the company and what decisions need approval.

Capital contributions and distributions

Covers contributions, profit and loss allocations, and distributions.

Banking, indemnification, and member changes

Covers bank accounts, indemnifying members, and any buy-sell or removal terms.

Dissolution

Sets how the company is wound down and assets are distributed.

Disputes and general provisions

Covers standard terms such as notices, how disputes are handled, and signatures.

Points Worth Negotiating

  • Each member's ownership share and contribution
  • How profits and losses are divided
  • Who manages the company and how decisions are made
  • What happens when a member wants to leave or sell
  • How the company can be dissolved

Frequently Asked Questions

What is an LLC operating agreement?
An LLC operating agreement is the agreement among the members of a limited liability company. It sets out ownership, money, management, voting, and what happens if a member joins or leaves.
Who should sign it?
Every member of the company signs. Each signature confirms the ownership splits, the management and voting rules, and the terms for member changes.
Do I need one if I am the only owner?
Yes. A single-member company uses one to record how the business is run and to keep company matters separate from personal ones.
How are profits usually divided?
Profits are divided in line with ownership percentages, but members can agree to a different split. The agreement records how profits and losses are shared.
What should I have ready before creating it?
Have the company name and state, the members and their ownership percentages, capital contributions, the profit split, the management and voting rules, the tax classification, and transfer and dissolution terms.
What happens if a member wants to leave?
A dedicated section covers buyout terms, how a share is valued, and whether other members can approve or block a transfer.
Should I choose the custom contract or the editable template?
Choose the custom contract to answer a few questions and have it filled in for you. Choose the editable template if you prefer a blank version with labeled fields to complete yourself.
What are common warning signs in an LLC operating agreement?

These are common issues to watch for in any LLC operating agreement:

  • No clear ownership percentages
  • Vague management or voting rules
  • No process for a member leaving
  • No restrictions on transferring ownership
  • No plan for resolving disputes
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