Single-member LLC operating agreement

An operating agreement for an LLC with one owner. Fill in the details, then download it as a Word file or print it.

State LLC name Effective date

Who runs the LLC The members (member-managed) Managers the members appoint (manager-managed)

Principal office address

Members

Member name Address Contribution

Anything you leave empty prints as a line to fill in by hand. Nothing you type leaves your browser.

Operating Agreement of ____________________ LLC

A ____________________ limited liability company

This Operating Agreement (this “Agreement”) of ____________________ LLC (the “Company”) is made effective ____________________ (the “Effective Date”) by ____________________, the Company's sole member (the “Member”).

Article 1. Formation

1.1 Formation. The Company was formed as a limited liability company under the laws of the State of ____________________ by filing its articles of organization (or certificate of formation) with the state's business filing office.

1.2 The Act. “Act” means the limited liability company law of the State of ____________________, as amended from time to time. Where this Agreement is silent, the Act governs. Where the Act lets an operating agreement change one of its rules, this Agreement controls.

1.3 Name. The Company's name is ____________________ LLC. The Company may also do business under any other name chosen by the Member, after filing any assumed-name or fictitious-name registration the law requires.

1.4 Principal office. The Company's principal office is at ____________________, or at any other place chosen by the Member.

1.5 Registered agent. The Company's registered agent and registered office in the State of ____________________ are those named in its articles of organization (or certificate of formation), as changed from time to time by a filing with the state.

1.6 Purpose. The Company may carry on any lawful business for which a limited liability company may be formed under the Act.

1.7 Term. The Company began when its formation filing took effect and continues until it is dissolved and its affairs are wound up under Article 7.

Article 2. Member and capital

2.1 Member. The Member is ____________________, who owns all of the membership interests in the Company.

2.2 Contribution. The Member has contributed or will contribute ____________________ to the Company. The Member may contribute more at any time but is not required to.

2.3 Loans. The Member may lend money to the Company on terms approved by the Member. A loan is a debt of the Company, not a capital contribution.

2.4 Limited liability. No Member is personally liable for any debt, obligation or liability of the Company solely because of being a Member. The Company's failure to observe formalities is not a ground for holding any Member personally liable for the Company's obligations.

Article 3. Distributions

3.1 Distributions. The Company distributes cash and other property to the Member at the times and in the amounts decided by the Member.

3.2 Limit. The Company may not make a distribution that would leave it unable to pay its debts as they become due or that the Act otherwise prohibits.

Article 4. Management

4.1 Management by the Member. The Company is managed by the Member, who has full authority to manage its business and affairs and to act for and bind it.

4.2 Officers. The Member may appoint officers with the titles, duties and authority the Member sets, and may remove them at any time.

4.3 Compensation and expenses. No Member is paid for services to the Company unless the Member approves. The Company reimburses reasonable expenses incurred on its behalf.

4.4 Indemnification. To the fullest extent the Act allows, the Company indemnifies the Member against any loss, damage, claim or expense, including reasonable legal fees, incurred because of acting in good faith on the Company's behalf, except for gross negligence, willful misconduct, a knowing violation of law or a breach of this Agreement.

Article 5. Taxes, books and records

5.1 Tax classification. As long as the Company has one member, it is disregarded as an entity separate from the Member for federal income tax purposes, unless the Member elects to have it taxed as a corporation (for example, by filing IRS Form 8832 or, for S corporation status, Form 2553).

5.2 Fiscal year. The Company's fiscal year is the calendar year.

5.3 Books and records. The Company keeps complete and accurate books and records at its principal office, including its formation filing and all amendments, this Agreement, and its tax returns and financial statements for the last three years. The Member may inspect and copy them at any reasonable time.

5.4 Bank accounts. The Company's money is kept in accounts in the Company's name and is never mixed with any Member's own money.

Article 6. Transfers and succession

6.1 Transfers. The Member may transfer all or part of the membership interest. A person who receives the whole interest by a written transfer becomes a member when the transfer takes effect. A person who receives part of it becomes a member only if the Member consents in writing.

6.2 Death or incapacity. If the Member dies or is adjudged legally incapacitated, the Member's personal representative, guardian, heirs or other successors may exercise all of the Member's rights, including the right to continue the Company and to admit a successor as a member, to the extent the Act allows. The Company does not dissolve because of the event if a successor is admitted as a member within the time the Act allows.

Article 7. Dissolution

7.1 Events of dissolution. The Company is dissolved only on the first of these to occur:

(a) the Member's written decision to dissolve it;

(b) the passage of the time the Act allows after the Company stops having any members, unless a member is admitted within that time as the Act provides;

(d) any other event that requires dissolution under the Act despite this Agreement.

7.2 Winding up. After dissolution, the Member winds up the Company's affairs, sells any assets the Member chooses, and files any articles or certificate of dissolution the state requires.

7.3 Order of distribution. The Company's assets are applied in this order:

(a) to creditors, including the Member if a creditor, to pay the Company's debts and liabilities;

(b) to any reserves the Member considers reasonably necessary for contingent or unforeseen liabilities; and

Article 8. General provisions

8.1 Amendments. This Agreement may be amended only in a writing signed by the Member.

8.2 Entire agreement. This Agreement, with Schedule A, is the entire agreement about its subject and replaces any earlier agreement, written or spoken, about it.

8.3 Governing law. This Agreement is governed by the laws of the State of ____________________, without regard to its conflict-of-laws rules.

8.4 Severability. If any provision of this Agreement is held invalid or unenforceable, the rest remains in effect, and the provision is enforced to the greatest extent the law allows.

8.5 Binding effect. This Agreement binds and benefits the Member and the Member's heirs, personal representatives, successors and permitted assigns.

8.6 No rights for creditors. Nothing in this Agreement gives any creditor of the Company or of any Member any right or remedy.

8.7 Notices. Notices under this Agreement are given in writing, including by email.

8.8 Counterparts and electronic signatures. This Agreement may be signed in counterparts, and electronic signatures count as originals.

8.9 Interpretation. Headings are for convenience only. Words in the singular include the plural and the reverse, and “including” means “including without limitation.”

The Member signs this Agreement to be effective on the Effective Date.

______________________________

Member: ____________________

Date: ________________

Schedule A. Member

Member and address	Capital contribution	Percentage Interest
____________________	____________________	100%

Why a one-person LLC needs one

When you're the only member, nobody needs to agree with you, so an operating agreement can seem pointless. It's still worth signing, for three reasons:

It keeps the LLC separate from you. The main reason to form an LLC is to keep the business's debts away from your own assets. A court looks at whether you actually ran the LLC as a separate business. A signed agreement, a separate bank account and money kept apart from your own are the evidence.
Banks and lenders ask for it. Many banks want to see an operating agreement before opening an account for an LLC, and lenders and landlords may ask for it too.
It decides what happens if you die. Without a plan, your state's LLC law decides whether the LLC continues and who can run it. The agreement lets your personal representative or heirs keep it going.

What's in it

The single-member version is shorter than the one for several members. It covers formation, your contribution, distributions whenever you decide, management by you or by managers you appoint, default tax treatment, records and a separate bank account, transfers, what happens if you die or become incapacitated, and dissolution. Schedule A shows you as the owner of 100%.

Member-managed or with managers

Most one-person LLCs are member-managed: you run the business yourself. Choose manager-managed if you want someone else to run day-to-day operations, such as a hired manager, while you keep the decisions that matter most: amending the agreement, admitting a member, selling the business, merging, borrowing outside the ordinary course of business and dissolving.

Keeping the LLC separate day to day

The agreement says the LLC is a separate business. These habits are what make that true:

Open a bank account in the LLC's name and run every business payment through it, never your personal account.
Sign contracts and invoices in the LLC's name, as its member or manager, not in your own name.
Record what you put in as a contribution or a loan, and what you take out as a distribution, so the books show the difference.
File the state's annual or periodic report on time and keep the registered agent current, so the LLC stays in good standing.
Keep enough money in the business to cover its foreseeable debts.

After you sign

Keep the signed agreement with the LLC's records. You don't file it with the state. Sign a new agreement if you add a member, because an LLC with several members needs rules for sharing profits, voting and buyouts. The multi-member LLC operating agreement has them.

Common questions

Does a single-member LLC need an operating agreement?

It's worth having even when no one asks for it. It shows that the LLC is run as a separate business, which helps keep your personal assets out of its debts, and banks often ask for one before opening a business account. It also says what happens to the LLC if you die.

How is a single-member LLC taxed?

By default, the IRS disregards it: its income and expenses go on your own return, usually on Schedule C. You can elect to have it taxed as a corporation instead, including as an S corporation, and the agreement allows that.

Can I add a member later?

Yes. You'd then need a new agreement for several members, because sharing profits, votes and buyouts needs rules that a one-member agreement doesn't have. Use the multi-member version and have every member sign it.

Who signs a single-member operating agreement?

The member signs it. If you appoint managers, they don't need to sign, but give them a copy.