What this form is for
This form establishes the internal operating rules and ownership structure for your member-managed Limited Liability Company in New York. You need it when forming your LLC or when lenders require proof of company governance, ownership percentages, and decision-making authority.
Before you start
- Full legal names and addresses of all LLC members
- Exact ownership percentage for each member (must total 100%)
- Your LLC's official name as filed with the New York Department of State and your EIN from the IRS
- Initial capital contributions from each member (cash amounts and any property or services contributed)
-決ision on profit and loss allocation method (usually follows ownership percentages but can differ)
Step-by-step
1. Complete the header section with your LLC's legal name, formation date, and the state (New York). Include the effective date of this operating agreement.
2. Fill in Article I with each member's full legal name, current address, ownership percentage, and initial capital contribution amount. Verify percentages add to exactly 100%.
3. In Article II (Management), confirm the LLC is member-managed and list voting rights. Note whether decisions require majority vote, unanimous consent, or another threshold for major actions like taking loans or admitting new members.
4. Complete Article III (Capital Contributions) detailing what each member contributed initially and procedures for additional contributions if the business needs more funding later.
5. Fill out Article IV (Distributions) explaining how and when profits get distributed to members. Include the frequency (quarterly, annually) and whether distributions follow ownership percentages.
6. Address Article V (Transfer of Membership Interest) with any restrictions on members selling their ownership stake. New York allows transfer restrictions that protect remaining members.
7. Complete dissolution and withdrawal provisions in the designated articles, specifying what events trigger LLC dissolution and the process for a member exiting.
8. Have every member sign and date the signature page. New York does not require notarization for operating agreements, but some lenders prefer it, so consider getting signatures notarized.
What lenders look for
- Banks scrutinize ownership percentages and capital contributions to assess who controls borrowing decisions and whether the business is adequately capitalized. Any member with over 20% ownership will likely need to personally guarantee the loan.
- Ensure your signing authority section clearly states who can execute loan documents on behalf of the LLC. Vague language about management authority causes loan delays.
- Avoid leaving blanks in capital contribution sections. If a member contributed zero dollars initially, write "0" rather than leaving it empty, which raises red flags about incomplete documentation.