Do I Need an LLC Operating Agreement?

An LLC operating agreement is the internal document that says how your LLC is owned and run. Many states don't legally require one — but operating without it is a mistake, even if you're the only owner. Here's why, and what goes in one.

What an operating agreement does

It sets the rules: who owns what percentage, how profits are split, who makes decisions, and what happens if an owner leaves or the company dissolves. Without it, your LLC defaults to your state's generic rules — which may not match what you actually want.

Do single-member LLCs need one?

Yes — and here's the underrated reason. An operating agreement helps reinforce the "corporate veil," the legal separation between you and your business that protects your personal assets. If you ever face a lawsuit, having an operating agreement (and following it) supports the argument that your LLC is a real, separate entity. Banks and investors also frequently ask to see one.

Why multi-member LLCs absolutely need one

With two or more owners, the operating agreement is what prevents disputes. It answers the questions partners argue about later: How are profits divided? Who can sign contracts? What happens if someone wants out, stops contributing, or dies? Deciding this up front — while everyone's friendly — is far easier than fighting about it under stress.

What to include

1. Members and ownership percentages.
2. Capital contributions. What each member put in.
3. Profit and loss allocation. How money is distributed.
4. Management structure. Member-managed or manager-managed; who decides what.
5. Voting rights. How decisions are made.
6. Transfer of membership. What happens if someone sells or leaves.
7. Dissolution. How the LLC can be wound down.

Get a free operating agreement

SignedDocu generates an LLC operating agreement for single- or multi-member LLCs with the ownership, management, and transfer provisions above. Answer a few questions and download it.