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An operating agreement is the most important document most LLC owners never think about — until they need it.
By that point, a bank has frozen an account application, a co-founder disagreement has turned into a standoff, or a payment platform has asked for proof of who owns what. A clear operating agreement is what each of those moments turns on. Without one, your company runs on your state's default rules — written by a legislature that has never met you and knows nothing about your business.
This guide explains what an LLC operating agreement is, what it should contain, and how the document changes based on your state and your ownership structure. At the top, you will find a free generator that builds a customized operating agreement for Wyoming, Delaware, New Mexico, Florida, Texas, and California LLCs — one you can download, review, and sign, as a Word document or PDF.
In this guide, you will learn:
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Build a customized operating agreement for your LLC in under two minutes. Choose your state and structure, enter your details, and download a formatted document to review and sign — no signup required.
An LLC operating agreement is a legal document that sets out how a limited liability company is owned and managed. It records the rights and responsibilities of every member (owner), and defines the rules the company follows when it makes decisions, distributes money, and handles disagreements.
It is a private document. You do not file it with the state, it does not appear in any public registry, and no government agency reviews it when you form your LLC. It exists to govern the internal workings of your company — and to show, when someone asks, exactly how your LLC is structured.
That "when someone asks" is the part owners underestimate. The operating agreement is the document a bank typically asks for before it opens your account, the document a court reads when members disagree, and the document a payment processor or investor asks for to confirm who controls the company.
These two documents are constantly confused, so it is worth being precise. The Articles of Organization (called a Certificate of Formation in some states) is the public filing that creates your LLC. The operating agreement is the private document that governs it. You need both, and one cannot stand in for the other.
In short: the Articles of Organization brings your LLC into existence; the operating agreement tells it how to live.
The honest answer is "it depends on the state, and on what you mean by required." For five of the six states here — Wyoming, Delaware, New Mexico, Florida, and Texas — the law does not require you to adopt a written operating agreement. Delaware and Texas recognize written, oral, or implied agreements — Delaware's statute even assumes one exists in some form — but neither requires you to put it in writing. California is the exception: the California Secretary of State states that an LLC must have an operating agreement, although California law lets it be oral, written, or implied, and it is kept internally rather than filed.
Either way, the practical answer across all six states is the same: you want a written operating agreement, even where the statute does not force you to file — or even have — one. "Not required" is a long way from "a bad idea," and treating the two as the same is how owners get caught out.
Even where the law does not demand one, you will almost certainly need an operating agreement in practice:
A solid operating agreement covers nine core areas. No statute dictates these word-for-word, but together they are what a complete agreement addresses — and the generator above is built to cover all of them. Here is what each section does and why it matters.
The agreement identifies the company by its legal name, state of formation, principal office address, registered agent, and effective date. This anchors the document to one specific legal entity — it is how a bank or a court confirms the agreement actually applies to your LLC.
Every member is named, with their address and ownership percentage stated clearly. For a multi-member LLC, the percentages must total exactly 100% (some agreements use membership units instead of percentages — either works, as long as the math is exact). Vague language here — "roughly equal shares," "as agreed later" — is where disputes are born.
Sidenote. Two state terminology notes. On Florida's public Sunbiz record, a member with management authority appears under the title code "AMBR" (Authorized Member) — but Florida's statute itself uses plain "member" and "manager," and so should your agreement. Texas calls the document a "company agreement" rather than an "operating agreement." Use each state's wording so your agreement lines up with its public record.
Your LLC is either member-managed or manager-managed:
This choice sets your company's management structure and generally determines who has authority to sign contracts, open bank accounts, and make decisions that bind the LLC.
This section records what each member has put in, or agreed to put in — cash, assets, or services. It also sets out whether members can be required to contribute more later, and on what terms; by default, no one is forced to add capital they did not already agree to.
Profits and losses are usually allocated in proportion to ownership. The agreement can specify something different — for example, a preferred return to one member before the rest is split — but any departure from straight proportional allocation should be written down explicitly. Non-proportional or "special" allocations also carry federal tax consequences, so run them past a CPA before you lock them in.
Allocation (how profit is assigned on paper) is not the same as distribution (when cash is actually paid out). The agreement defines when distributions can happen and includes a solvency limit — the company cannot pay out money it needs to cover its debts.
For LLCs with more than one member, the agreement defines how decisions get made. Routine matters may need a simple majority; major ones — admitting a new member, selling the business, dissolving the company — typically need unanimous consent. Spell out which decisions fall into which bucket.
Can a member sell their stake to an outsider? Pass it to a family member? The agreement sets the rules. A right of first refusal — giving existing members the chance to match any outside offer before a stake is sold — is a common feature of multi-member agreements.
What happens when the company winds down — who runs the process, in what order debts are paid, and how anything left over is divided. Skip this section and you create avoidable complications at exactly the moment everyone wants a clean exit.
If you are the only owner, it is tempting to skip the operating agreement entirely. Resist that. For a single-member LLC, the operating agreement does one job better than any other document you hold: it documents that the company is a separate entity from you, with its own ownership and governance.
That matters because one of the main benefits of an LLC is its liability shield — the wall between your business debts and your personal assets. The shield comes from your state's LLC law, but it is not unbreakable: if a creditor ever challenges it in court (lawyers call it "piercing the veil"), what helps is evidence that you ran the LLC as a real, distinct entity rather than a personal account with a fancy name. A signed operating agreement, a separate business bank account, and clean records are part of that evidence.
A single-member operating agreement is shorter and simpler than a multi-member one — there is no one to vote against, no profit split to negotiate. But it still needs the formation details, a clear statement that you hold 100% ownership, your management authority, and what happens to the company if you die or become incapacitated (a succession or transfer-on-death provision). Banks commonly ask to see it when you open your account.
If you are weighing this structure against bringing in a partner, our guide to LLC types with real examples — single-member, multi-member, member-managed, and manager-managed → walks through each one.
For an LLC with two or more owners, the operating agreement is the most valuable document the business will ever produce. It is the record of what you all agreed to before there was any money or conflict on the table — and that record is what protects every member when memories diverge later.
A multi-member operating agreement carries more weight in several sections: ownership stakes must be exact — percentages totalling 100%, or clearly defined units — voting thresholds must be set, profit and loss allocation agreed, and transfer restrictions (like a right of first refusal) written in. For a simple even split, getting this right is a careful afternoon; for anything involving investors, vesting, valuable assets, or unusual economics, it is worth a lawyer's review. The cost of getting it wrong is a dispute resolved by a judge applying default state law to a business that judge has never seen.
Member-managed is the right choice for most non-residents running their own business through a US LLC. If you own the company and run it yourself — even from abroad — member-managed is usually the natural fit. (You can also be the named manager of a manager-managed LLC; the classification comes from your operating agreement and formation filing, not just from who does the day-to-day work — some owners deliberately choose manager-managed for the Florida privacy reason noted above.) Whichever you choose, the operating agreement records it and sets out who has authority to sign contracts, open accounts, and act for the company.
Manager-managed makes sense when:
Sidenote. For non-residents using Florida LLCs: in a manager-managed Florida LLC, passive members (owners who do not manage) generally do not need to be listed on Sunbiz, the public business registry — though the managers you name and the details in your annual report are public. Manager management can keep a passive owner's name off the public filing, but it does not make the company anonymous. If privacy matters to you, the management choice is one factor worth weighing.
The operating agreement references your state's LLC Act throughout. Here is what changes from state to state. A quick note for non-resident readers first: for most people forming from abroad, Wyoming, New Mexico, and Delaware remain the most practical homes for an LLC. Texas and California carry heavier costs and more public disclosure — they are included here because many owners already operate there, not because they are the default choice for a new non-resident LLC.
Governing law: Wyoming Limited Liability Company Act (Wyo. Stat. § 17-29-101 et seq.)
Wyoming is the most popular formation state for non-residents because it combines privacy, low cost, and simple compliance. Member and manager names are not required on Wyoming's public formation filing. The operating agreement is not filed with the state. Wyoming's LLC Act provides strong default protections, and the operating agreement lets you customize them — particularly around voting thresholds, distributions, and management authority.
Governing law: Delaware Limited Liability Company Act (6 Del. C. § 18-101 et seq.)
Delaware's LLC Act is the most permissive in the country — its stated policy is to give "maximum effect to the principle of freedom of contract," letting the operating agreement modify most default rules (a few, such as the implied contractual covenant of good faith and fair dealing, cannot be waived). That flexibility is worth it for a complex multi-member structure or unusual economic arrangements. Delaware also assumes every LLC has an agreement — written, oral, or implied — so putting yours in writing is how you actually capture that flexibility. For a straightforward single-owner consulting business, it offers little practical advantage over Wyoming, and Delaware LLCs pay a flat $300 annual LLC tax (Delaware LLCs file no annual report).
Governing law: New Mexico Limited Liability Company Act (NMSA 1978 § 53-19-1 et seq.)
New Mexico LLCs have no annual report requirement — one of very few states where that is true. The formation filing does not require members to be named, formation is inexpensive ($50, one-time), and the operating agreement stays private. It is a strong low-maintenance option for solo owners who do not need Wyoming's specific reputation.
Governing law: Revised Florida Limited Liability Company Act (Chapter 605, Florida Statutes)
Florida labels people on its public Sunbiz record with title codes: a member with management authority appears as "AMBR" (Authorized Member), a manager as "MGR." Florida's statute itself uses the plain terms "member" and "manager," so use those in your agreement — and make sure the management structure it describes matches how you are listed on Sunbiz. Florida also requires an annual report ($138.75, due by 1 May, with a steep late penalty after that) and publicly discloses the names and addresses of the people listed on the filing. That is a real privacy difference from Wyoming, New Mexico, and Delaware, which do not require all members or managers to be named on the standard formation filing (names can still appear in optional filings or other public records).
Governing law: Texas Business Organizations Code (Tex. Bus. Orgs. Code § 101.001 et seq.)
Texas is the one state where the document has a different name: Texas law calls it a company agreement, not an operating agreement. The substance is the same, and a Texas company agreement is fully recognized and enforceable under § 101.052. Texas LLCs are formed by filing a Certificate of Formation ($300) and do not file an annual report with the Secretary of State. Instead, they report to the Texas Comptroller each year: most small LLCs owe little or no franchise tax but generally still file a Public Information Report (a few entity types file an Ownership Information Report instead), which identifies the LLC's governing persons — its managers if it is manager-managed, or its members if it is member-managed. Your company agreement should use the "company agreement" label to stay consistent with Texas terminology.
Governing law: California Revised Uniform Limited Liability Company Act (Cal. Corp. Code § 17701.01 et seq.)
California requires every LLC to have an operating agreement, though it may be oral, written, or implied (Cal. Corp. Code § 17701.10) — so in practice you must have one. Always put it in writing, because an oral agreement is almost impossible to prove when it matters. California is also one of the most expensive states in which to maintain an LLC: an $800 minimum annual franchise tax generally applies, plus a Statement of Information ($20) within 90 days of formation and every two years after. The operating agreement itself is still private and not filed with the state.
The generated document is a solid starting point — but read every section before you sign. Confirm that the ownership percentages, management structure, and governance rules reflect what you actually intend. If your situation is complex — multiple members, unusual economics, high-value assets — have an attorney review it.
All members should sign the written agreement, and the manager should sign too if the LLC is manager-managed. (Some states will recognize an oral or implied agreement, but a fully signed written one is far stronger evidence of what everyone agreed.) In most states — including all six covered by this generator — notarisation is not required to adopt the agreement itself, though a separate document such as a deed for real estate the LLC holds may carry its own notarisation rules. Digital signatures are generally valid under US federal law (the E-SIGN Act) and most state laws.
Keep at least two copies:
This is the document you produce when a bank, platform, investor, or court asks for proof of your LLC's governance. Losing it is an avoidable problem.
An operating agreement reflects your LLC at a point in time. When membership changes — a new member joins, one leaves, ownership shifts — update it, following the amendment procedure your agreement sets out (usually a written amendment signed by the members). One caveat: updating the agreement does not update the state's records — changing your registered agent or business address usually needs a separate filing with the state too. A major structural change may warrant a fresh agreement.
Using a generic template without reading it. Many operating agreements floating around online were written for a different state, a different management structure, or a different decade. At a minimum, confirm the governing-law clause names your actual state's LLC Act.
Conflicting with your Articles of Organization. If your state filing says member-managed and your operating agreement says manager-managed, you have a contradiction that a bank or court will notice. Keep the two consistent.
Not updating after membership changes. An agreement that still lists a departed member — or omits a new one — is worse than none, because it actively misstates who owns the company.
Missing the 100% ownership total. For multi-member LLCs, percentages must sum to exactly 100%. Even a rounding gap (33.33% + 33.33% + 33.33% = 99.99%) creates ambiguity. Use precise figures, or assign units instead of percentages.
No dissolution provisions. Skipping the dissolution section is common and causes complications when the company eventually closes. Even if winding down is the last thing on your mind, the clauses cost nothing to include now.
An LLC operating agreement is a private legal document that governs how a limited liability company is owned and run. It defines who the members are, what percentage each holds, how the company is managed, how profits are distributed, and what happens in a dispute or when the company closes. It is separate from the Articles of Organization and is not filed with the state.
A complete operating agreement covers nine areas: company formation details, member information and ownership percentages, management structure (member- or manager-managed), capital contributions, profit and loss allocation, distributions, voting rights, transfer of membership interests, and dissolution. Together these define who owns the company, who runs it, how money moves, and how disputes and exits are handled.
It is a written legal document, usually 5 to 20 pages, organized into numbered articles — one for each major topic (ownership, management, capital, distributions, voting, transfers, dissolution). It opens with the company's formation details and ends with a signature block for every member. The generator above produces a correctly formatted example you can download and read in full.
In most states it is not strictly required — California is the exception, where the Secretary of State says you must have one (though it can be oral or implied). Either way, yes, you should always have a written one. A single-member LLC operating agreement documents the separation between you and the business, which helps support your liability protection if it is ever challenged in court. It also satisfies what banks typically ask for and establishes your authority to manage and act for the company.
For a straightforward single-member LLC, a well-built template like the one generated above is a solid starting point. For multi-member LLCs, unusual economic arrangements, or situations involving investors or significant assets, paying for legal review is worth it.
The Articles of Organization is the public document filed with the state to form your LLC — it creates the legal entity. The operating agreement is a private document between the members that governs how the company runs. They serve different purposes, and neither replaces the other.
Yes — follow the amendment procedure written into the agreement, which often requires the written consent of all members (some agreements set a different threshold). For routine internal changes, a signed amendment is enough; but remember that amending the agreement does not update public records, so changing something like your registered agent or business address usually also needs a separate state filing. Ownership transfers take more than an amendment (an assignment, the other members' consent, and sometimes tax filings), so treat those as a transaction, not a quick edit. For major structural changes, such as switching to manager-managed, reissuing the full agreement is cleaner.
In most states — and in none of the six covered by this generator — no. Every member should sign it, but notarisation is not required, and digital signatures are generally valid under US federal law. A few situations (such as recording real estate held by the LLC) may call for notarisation, so check if your LLC holds property.
Wyoming does not legally require one. But banks, payment processors, and partners may ask for it — and without it, Wyoming's default LLC Act rules govern your company, which may not match your intentions. It is strongly recommended for every Wyoming LLC, single-member ones included.
Your LLC runs on your state's default LLC rules. For a single-member LLC with no disputes, that may cause no immediate problem. For a multi-member LLC, or the moment a bank requirement or a dispute arises, the absence of an agreement creates serious complications — and you lose a key piece of evidence that your LLC is a separate entity from you.
Kathleen Schweitzer is an international taxation expert, providing strategic counsel to businesses with complex compliance, tax and financial issues in an effort to help them grow their business globally. She often gives lecture on U.S. tax developments, transfer pricing, taxes on the sale of goods and services, U.S. tax policy development, taxation of internet commerce and multi-jurisdictional global tax planning. Kathleen enjoys reading, photography, cooking and spending time with her husband and eleven-year-old daughter.
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