Business Operating Agreement Template

LIMITED LIABILITY COMPANY OPERATING AGREEMENT

FOR

[Company Name], LLC

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DOCUMENT CONTROL & JURISDICTION

• Effective Date: [Month, Day, Year]
• Version: 1.0 (Standard Multi-Member/Single-Member Form)
• Governing Jurisdiction: State of [State of Formation]
• Entity Type: Domestic Limited Liability Company

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OFFICIAL LEGAL NOTICE & DISCLAIMER

CRITICAL LEGAL NOTICE: This Operating Agreement is a template provided for informational and structural purposes only and does not constitute formal legal, tax, or accounting advice. Corporate governance laws vary significantly by jurisdiction. Execution of this document establishes a legally binding contract affecting statutory rights, fiduciary duties, and financial liabilities. The organizers, drafters, and publishers of this document disclaim all liability arising from the direct or indirect use, modification, or execution of this template. Competent legal counsel and certified public accountant consultation are strongly advised prior to execution.

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ARTICLE I: COMPANY FORMATION & BASIC PROVISIONS

1.1 Formation

The Members have formed a Limited Liability Company (the "Company") pursuant to the Limited Liability Company Act of the State of [State of Formation] (the "Act"). The rights and liabilities of the Members shall be as provided in the Act, except as otherwise expressly provided in this Operating Agreement (the "Agreement").

1.2 Name

The name of the Company is [Company Name], LLC.

1.3 Principal Place of Business

The principal office and place of business of the Company shall be located at: [Street Address, City, State, Zip Code] or such other location as the Board of Managers or Members may designate from time to time.

1.4 Registered Agent & Office

The name and address of the registered agent for service of process in the State of [State of Formation] is:

• Name: [Registered Agent Name]
• Address: [Street Address, City, State, Zip Code]

1.5 Term

The term of the Company shall be perpetual unless dissolved in accordance with the provisions of this Agreement or the Act.

1.6 Business Purpose

The purpose of the Company is to engage in any and all lawful acts or activities for which limited liability companies may be formed under the Act.

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ARTICLE II: CAPITAL CONTRIBUTIONS & INTERESTS

2.1 Initial Capital Contributions

Concurrently with the execution of this Agreement, the initial Members have contributed cash, property, or services to the Company in the amounts and percentages set forth below:

2.2 Issuance of Membership Interests

The Company's equity shall be divided into Units of Membership Interest. The issuance of all Units shall be authorized by the Members. Certificates representing Membership Interests, if any, shall bear an appropriate restrictive legend regarding securities law compliance and transfer restrictions.

2.3 Additional Capital Contributions

No Member shall be mandated to make any additional capital contributions beyond their initial contribution unless unanimously agreed upon in writing. If additional capital is required and approved by the Members, each Member shall have the right, but not the obligation, to contribute their pro-rata share of the additional capital.

2.4 Capital Accounts

An individual capital account shall be maintained for each Member in accordance with Internal Revenue Code (IRC) Section 704(b) and applicable Treasury Regulations. No Member shall be entitled to withdraw any part of their capital account or receive any interest thereon prior to the liquidation of the Company.

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ARTICLE III: PROFITS, LOSSES, AND DISTRIBUTIONS

3.1 Allocation of Profits and Losses

Net profits and net losses of the Company for each fiscal year shall be allocated to the Members pro-rata in exact proportion to their respective Ownership Interests, subject to any mandatory regulatory allocations required under IRC Section 704(c).

3.2 Distributions

Distributions of available cash (derived from operations, refinancing, or asset sales, after the retention of reasonable operational reserves determined by management) shall be made at such times and in such amounts as determined by the Members, strictly pro-rata in accordance with the Members' respective Ownership Interests.

3.3 Tax Distributions

To the extent cash is available, the Company shall distribute to each Member an amount sufficient to cover estimated federal and state income tax liabilities arising from pass-through income generated by the Company, calculated using the highest applicable individual marginal tax rate.

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ARTICLE IV: MANAGEMENT & OPERATIONS

4.1 Management Structure

• [ ] Member-Managed: The business and affairs of the Company shall be managed directly by the Members.
• [ ] Manager-Managed: The business and affairs of the Company shall be managed by one or more Managers appointed pursuant to Article 4.2. (Check and complete the applicable governance model)

4.2 Appointment of Managers (If Manager-Managed)

The initial Manager(s) of the Company shall be:

• [Full Name of Manager]
• Title: [e.g., Managing Director / Chief Executive Officer]
• Address: [Street Address, City, State, Zip Code]

Managers shall serve until their resignation, removal, or replacement by a majority vote of the Members.

4.3 Authority of Members/Managers

Except as otherwise expressly provided herein, individual Members (in a Member-managed entity) or Managers (in a Manager-managed entity) do not possess the authority to bind the Company to third-party contracts without the prior written consent of Members holding at least [e.g., 51%] of the total Ownership Interests.

4.4 Standard of Care & Fiduciary Duties

Each Member and Manager shall discharge their duties in good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner reasonably believed to be in the best interest of the Company.

4.5 Limitation of Liability & Indemnification

No Member, Manager, officer, or employee of the Company shall be personally liable to the Company or its Members for monetary damages for breach of fiduciary duty, save for acts of intentional fraud, gross negligence, or willful misconduct. The Company shall indemnify and hold harmless any person party to this Agreement against all expenses, judgments, and fines incurred in connection with legal proceedings arising out of their association with the Company.

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ARTICLE V: MEMBER MEETINGS & VOTING

5.1 Annual Meetings

An annual meeting of the Members shall be held on the [Day, e.g., First Monday] of [Month] of each calendar year for the purpose of transacting such business as may come before the meeting.

5.2 Special Meetings

Special meetings of the Members may be called by any Member holding not less than [Percentage, e.g., 20%] of the aggregate Ownership Interests.

5.3 Voting Rights

Except as otherwise explicitly required by the Act or this Agreement, all operational and financial decisions shall require the affirmative vote of Members holding a simple majority ([>50%]) of the Ownership Interests. The following actions require Unanimous Written Consent:

1. Amendment of this Operating Agreement.
2. Admission of new Members.
3. Merger, consolidation, or sale of substantially all Company assets.
4. Voluntary dissolution of the Company.

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ARTICLE VI: TRANSFERS & RESTRICTIONS ON TRANSFERS

6.1 General Restriction

No Member may sell, assign, transfer, pledge, hypothecate, or otherwise encumber or dispose of ("Transfer") all or any part of their Membership Interest without the prior written consent of all non-transferring Members, which consent may be withheld in their sole and absolute discretion.

6.2 Right of First Refusal

If a Member receives a bona fide third-party offer to purchase all or part of their Membership Interest, the transferring Member must first offer such interest to the Company, and subsequently to the remaining Members, on the same terms and conditions, providing [Number, e.g., 30] days written notice to exercise said right.

6.3 Death, Disability, or Bankruptcy of a Member

Upon the death, permanent disability, bankruptcy, or dissolution of a Member, the Company and/or remaining Members shall possess the option to purchase the affected Member’s Interest at fair market value as determined by an independent certified appraiser within [Number, e.g., 90] days of the triggering event.

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ARTICLE VII: DISSOLUTION, LIQUIDATION, & TERMINATION

7.1 Dissolution Events

The Company shall dissolve exclusively upon the occurrence of any of the following events:

1. The written determination of all Members to dissolve the Company.
2. The entry of a judicial decree of dissolution under the Act.
3. The sale, disposition, or abandonment of all or substantially all the physical and intangible assets of the Company.

7.2 Liquidation Process

Upon dissolution, a designated liquidating trustee (who may be a Member or Manager) shall wind up the affairs of the Company. Assets shall be distributed in the following strict order of priority:

1. Payment of debts and liabilities of the Company to creditors (including Members who are creditors, to the extent permitted by law).
2. Establishment of reasonable cash reserves for contingent liabilities.
3. Distribution of remaining assets to Members in proportion to their positive capital account balances, and subsequently pro-rata to their Ownership Interests.

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ARTICLE VIII: MISCELLANEOUS PROVISIONS

8.1 Amendments

This Agreement may be amended, modified, or altered only through a written instrument duly executed and approved by 100% of the active Members of the Company.

8.2 Governing Law & Venue

This Agreement, and all claims or causes of action arising out of or relating to this Agreement, shall be governed by, construed, and enforced in accordance with the internal laws of the State of [State of Formation], without regard to its conflict of laws principles.

8.3 Severability

If any provision of this Agreement is held to be invalid, illegal, or unenforceable, the remaining provisions shall continue in full force and effect, provided that the foundational economic and structural bargains of this Agreement are not materially impaired.

8.4 Entire Agreement

This Agreement constitutes the sole and entire agreement of the Members with respect to the subject matter hereof, superseding all prior discussions, negotiations, term sheets, and preliminary agreements.

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ARTICLE IX: EXECUTION & SIGNATURES

IN WITNESS WHEREOF, the sole Organizer and/or all initial Members have executed this Operating Agreement as of the Effective Date first written above.

MEMBER 1:

Signature: ____________________________________________________
Printed Name: [Full Legal Name of Member 1]
Title: [e.g., Member / Managing Member]
Date: [Month, Day, Year]

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MEMBER 2:

Signature: ____________________________________________________
Printed Name: [Full Legal Name of Member 2]
Title: [e.g., Member]
Date: [Month, Day, Year]

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(Attach additional signature blocks as necessary for multi-member entities)

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STEP-BY-STEP EXECUTION, FILING, & ENFORCEMENT GUIDE

1. Review and Fill Blanks: Replace all bracketed placeholders (e.g., [...]) with accurate operational, structural, and legal particulars matching your specific business enterprise.
2. Legal and Tax Review: Have local corporate counsel and a certified public accountant review the finalized draft, specifically confirming that management structures, tax distribution clauses, and voting thresholds align with state-specific LLC statutes and individual financial goals.
3. Execution: Ensure all initial members sign and date the signature block in ink or via a legally compliant e-signature platform (such as DocuSign or Adobe Sign).
4. Record Keeping: Store the fully executed Operating Agreement in the Company’s official Minute Book / Corporate Records Binder. This document is an internal governance contract and typically does not need to be filed with the Secretary of State, but must be kept available at the principal place of business.
5. Banking Setup: Provide a copy of this executed Agreement, alongside your Articles of Organization and EIN (Employer Identification Number) letter, to your commercial banking institution to open corporate operating accounts.