LLC University®

1 Member LLC example

In this example, there’s only one person for you to agree with: yourself. So whatever you decide is what happens.

2 Member LLC examples

Member A owns 50% and Member B owns 50% In this example, both Members must always agree on everything in order for actions to be taken. This is because no Member alone has 51% of the votes. Member A owns 70% and Member B owns 30% In this example, Member A basically runs the show. Anything they want to do, they can do, since they have the majority vote. Member B has no power (they just get 30% of the profits). <img class="aligncenter wp-image-48821" src="https://www.llcuniversity.com/wp-content/uploads/Operating-Agreement-Pie-Chart-3.png" alt="LLC Operating

3 Member LLC examples

All 3 Members own 33.33% In this example, only 2 Members must agree (or disagree) on an action. Member A owns 50%, Member B owns 25%, and Member C owns 25% In this example, Member B and Member C don&#8217;t have enough power amongst themselves to make decisions. At least one of them will need to be in agreement with Member A in order for an action to be taken. <img class="aligncenter wp-image-48823" src="https://www.llcuniversity.com/wp-content/uploads/Operating-Agreement-Pie-Chart-5.png" alt="LLC Operating Agreement Pie Chart wit

Does a Single-Member LLC need an Operating Agreement?

While not legally required in most states, it&#8217;s strongly recommended that all Single-Member LLCs have an Operating Agreement. If you go to court, an Operating Agreement helps prove that your Single-Member LLC is being run as a separate legal entity. This helps confirm the company&#8217;s limited liability status, and that is what protects your personal assets.

Does a Multi-Member LLC need an Operating Agreement?

While not legally required in most states, it&#8217;s strongly recommended that all Multi-Member LLCs have an Operating Agreement. The Operating Agreement spells out ownership percentages, profit distribution, operating procedures, and management responsibilities. And if you go to court, an Operating Agreement helps prove that your Multi-Member LLC is being run as a separate legal entity.

Is an LLC Agreement the same as an Operating Agreement?

Yes , an LLC Agreement is the same thing as an LLC Operating Agreement . Some states call an Operating Agreement an LLC Agreement or a Company Agreement. These all refer to the same thing. And most states use the term Operating Agreement .

How much does an Operating Agreement cost?

An Operating Agreement doesn&#8217;t have to cost anything. There are templates or Operating Agreement Generators online (like ours; see above ) that you can use for free. Many LLC filing companies charge $99 or more for a basic, fill-in-the-blanks Operating Agreement. And you generally can&#8217;t edit these. If you hire a lawyer to draft an Operating Agreement, it can cost anywhere from a few hundred dollars to $1,000.

How to find my Operating Agreement for my LLC?

Since the Operating Agreement isn&#8217;t on file with the state (or IRS), it&#8217;s your responsibility to keep a copy of it. Said another way, if you can&#8217;t find your Operating Agreement, there&#8217;s nowhere to go to get it. (Well, if you have a business partner, your partner may have a copy.) If not, you can make a new Operating Agreement (called Operating Agreement #2) and enter this language at the top: &#8220;This Operating Agreement #2, dated [date], overrides, replaces, and supersedes all prior Operating Agreements, written and/or oral for this LLC.&#8221;