What Is an Operating Agreement?

An operating agreement is an internal document that outlines how your LLC is governed — ownership percentages, profit distribution, voting rights, and what happens if a member leaves. While not every state legally requires one, every LLC should have one on file.

Single-Member vs Multi-Member Operating Agreements

A single-member LLC operating agreement is a simple document confirming that you are the sole owner and outlining how the business is managed. A multi-member operating agreement is more detailed, covering ownership splits between members, decision-making authority, and how profits and losses are shared.

Why You Need One

• Strengthens your liability protection by showing your LLC operates as a separate entity
• Required by most banks before opening a business account
• Prevents disputes between members over ownership and profit splits
• Overrides your state’s default LLC rules, which may not match your intentions