How to complete a LLC Operating Agreement

This operating agreement establishes the management structure, ownership percentages, and operating rules for your member-managed LLC. You need this document when forming a new LLC or when banks require proof of your legal authority to borrow on behalf of the company.

- Articles of Organization filing receipt and your assigned EIN from the IRS - Full legal names and addresses for all members (owners) exactly as they appear on government-issued ID - Each member's ownership percentage (must total 100 percent) - Capital contribution amounts each member has invested or will invest in cash, property, or services - Decision on profit and loss allocation method (typically matches ownership percentages but can differ) - Your chosen state of formation so you can include required state-specific provisions

1. Enter the LLC's full legal name exactly as registered with your secretary of state, the formation date, and the governing state. Reminder: select your governing state before completing this form, as certain provisions vary by jurisdiction. 2. List all members in the designated table with full legal names, addresses, ownership percentages, and initial capital contributions. Double-check that percentages add to exactly 100. 3. Complete the capital contributions section specifying what each member contributed (cash amount, property description with fair market value, or services rendered with assigned dollar value). Attach separate schedules if contributions are complex. 4. Define the management structure by confirming this is member-managed (all members can bind the LLC) or designating specific managing members if only certain owners will have signing authority. 5. Fill in voting thresholds for major decisions. Typical structure: routine matters require majority vote, while amendments, member admission, or dissolution require unanimous or supermajority consent. 6. Address profit and loss allocation. If distributions follow ownership percentages, simply reference the member schedule. If using a special allocation, detail the formula clearly. 7. Complete transfer restrictions explaining whether members can sell their interests freely or if remaining members have right of first refusal. 8. Add banking resolution language identifying which members are authorized to open accounts, sign checks, and execute loan documents. Banks require this section to process commercial credit applications. 9. Have all members sign and date in the presence of a notary if your state requires notarization for operating agreements.

- Banks scrutinize the signing authority section to verify that the person applying for credit has documented power to obligate the LLC. Vague language like "members may act" will delay underwriting. - Underwriters reject operating agreements with internal inconsistencies, such as ownership percentages that do not total 100 or capital contributions that contradict tax returns. - Keep one original with raised notary seal in your company records binder. Lenders often require certified copies, and photocopies of flat signatures raise fraud concerns.