Single Member LLC Operating Agreement 5
Single Member LLC Operating Agreement 1
Single Member LLC Operating Agreement 2
Single Member LLC Operating Agreement 3
Single Member LLC Operating Agreement 4
Single Member LLC Operating Agreement 5
Single Member LLC Operating Agreement 1

Single Member LLC Operating Agreement

    It is important to have an operating agreement for a single member LLC when it begins to do business with third parties. But if you need to create one on your own, you may not know where to start. Here we have prepared a single member LLC operating agreement template. It has all the sections you need to form your LLC, profit distribution, and more. Written by legal experts who understand your needs, you’ll know the agreement created by this template is completely legal.

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Single Member LLC Operating Agreement
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Single Member LLC Operating Agreement

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As the name provides, a single member LLC is a limited liability company where there is only one owner called a member. Some may refer to it as sole member LLC or simply ‘SMLLC’ for short. Although there is only one owner, the LLC is a legal entity that is separate and distinct from its owner. To make sure that this separation is clear cut, a single member LLC should have a single member LLC operating agreement.

What is a Single Member LLC Operating Agreement ?

A single member LLC operating agreement is a written document that not only states the fact that the owner and the SMLLC are two separate and distinct entities, but it also contains the rules that the company should follow in its daily operation and management. An operating agreement for single member LLC lays down details that will guide business decisions, financial transactions, and even employee interactions. It is an internal document, which means it is not required to be published or registered in a government agency.

Because this type of LLC only has one member, which is very different from multi-member operating agreement, an operating agreement for a single member LLC only requires one signature -- the signature of its only owner. This means that the member can decide what to include and what not to include in the operating agreement. Once signed, the SMLLC operating agreement will bind the owner as well as the entire LLC, including its officers and employees.

To get an idea of what an operating agreement looks like, look for a free single member LLC operating agreement template online from CocoSign.

Attract investors to your LLC with our single member LLC operating agreement template!

Do you want to take a step ahead in the direction of your LLC? Why not sign an operating agreement for a single-member LLC? We have made drafting a single sample member LLC operating agreement much easier. Check out our free, easy-to-download template.

When and Why Is a Single Member LLC Operating Agreement Necessary?

Not all states require a single member LLC operating agreement before a company can do business or register as an entity. Nevertheless, having one is highly recommended and will come in handy once the single member LLC starts transacting with third parties.

Many banks, for instance, demand to see an operating agreement before it approves a loan application. Similarly, most investors look for an operating agreement before they agree to part with their money. That’s because a single member operating agreement typically shows capital contributions, decision-making authority, and distribution of profits and losses.

Most importantly, a single member LLC operating agreement protects both the owner and the LLC in case of liability.

What to Include in A Single Member LLC Operating Agreement?

As a single owner of your LLC, you are free to write your operating agreement any way you want. Note, however, that some states require certain provisions to be included or not varied in any way. These provisions are often called non-waivable provisions.

 

Basically, you want to include the following information in your single member LLC operating agreement:

Details on company formation

  • Company name
  • Principal office address
  • Where and when your Articles of Organization was registered
  • Designated registered agent and office
  • Powers and purposes of the company
  • Administration and management

Membership

  • Name
  • Address
  • Rule on termination of membership
  • Rule of Succession
  • Compensation and entitlement to reimbursement

Capital Contribution

  • Initial capital contribution
  • Additional contributions made
  • Profits distribution
  • Share in losses

Accounting records

  • Recording of books
  • Fiscal year

Dissolution of the LLC

  • Grounds for dissolution
  • Winding up and liquidation process

Miscellaneous provisions

  • Indemnification and liability
  • Amendment
  • Governing law

Key Considerations

Apart from the non-waivable provisions required under the law of the state where you intend to register your LLC, there are other details that you need to consider when drafting a single member LLC operating agreement. These are:

  • Whether or not an operating agreement is required by law in the state where you intend to do business
  • Whether or not you need a registered agent
  • Whether you will manage your company or you will appoint or hire a manager
  • How and when you will get paid
  • Under what circumstances will the LLC be dissolved
  • Who will succeed the single member in case of death or incapacity of him or her

While these key considerations may not be something you want to think about now, ensuring that they are settled as early as now can give you a better sense of direction as well as peace of mind.

Attract investors to your LLC with our single member LLC operating agreement template!

Do you want to take a step ahead in the direction of your LLC? Why not sign an operating agreement for a single-member LLC? We have made drafting a single sample member LLC operating agreement much easier. Check out our free, easy-to-download template.

Frequently Asked Questions

Will my LLC be penalized if we do not have an operating agreement?

Technically, no. While an operating agreement is not legally required to do business as an LLC, it’s highly recommended to have one to help run your company smoothly. Be that as it may, an operating agreement does not guarantee smooth-sailing operations. Moreover, having an operating agreement does not give a company the right to break the law just because the agreement permits the same.

Can I amend the single member operating agreement?

You can certainly amend the single member operating agreement. Note, however, that it must not be contrary to law or unreasonable.

When should I start writing an operating agreement?

You should start writing an operating agreement as soon as you decide to organize a single member LLC. Start by downloading a single member LLC operating agreement template that you can easily fill up.

Should a single member LLC operating agreement be registered?

There is no need to register your operating agreement unless otherwise required under the laws of the state where you intend to register your SMLLC as a legal entity.

What is a single member LLC articles of organization?

The single member LLC articles of organization is an external and public document that is required by law before an LLC can be registered in the state.

A single member LLC operating agreement is crucial to protect your personal assets as well as the assets of the limited liability company. CocoSign has made it easier for you to draft a sample single member LLC operating agreement. Check out our free, easily downloadable templates today.

DOCUMENT PREVIEW

SOLE MEMBER OPERATING AGREEMENT

OF
_______________________, LLC

 

An ______________ Limited Liability Company

 

 

THIS OPERATING AGREEMENT (“Agreement”) is made and entered into as of _______________, 20____, by and among _______________, LLC an ______________ Limited Liability Company (the "Company") and _______________, executing this Agreement as the sole member of the Company (the "Member") and hereby states as follows:

 

NOW, THEREFORE, for good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, it is agreed as follows:

 

  1. Organization.

 

  1. Formation of LLC. 
     

The Member has formed an ______________ Limited Liability Company named _______________, LLC by filing the Articles of Organization with the office in the State of ______________ on _______________, 20____. The operation of the Company shall be governed by the terms of this Agreement and the applicable laws of the State of ______________ relating to the formation, operation and taxation of a LLC, specifically the provisions under _________________ which set out the guidelines and procedures for the formation and operation of a LLC hereinafter collectively referred to as the "Statutes." To the extent permitted by the Statutes, the terms and provisions of this Agreement shall control in the event there is a conflict between the Statutes and this Agreement.

 

  1. Purposes and Powers. 
     

a)     The purposes of the Company shall be:
 

(i)     _______________________________________________________; and
 

(ii)   To perform or engage in any and all activities and/or businesses for which limited liability companies may be engaged under the Statutes.

 

b)     The Company shall have all powers necessary and convenient to effect any purpose for which it is formed, including all powers granted by the Statutes.

 

  1. Duration. 

     

The Company shall continue in existence until dissolved, liquidated or terminated in accordance with the provisions of this Agreement and, to the extent not otherwise superseded by this Agreement, the Statutes.

 

  1. Registered Office and Resident Agent. 

    The Registered Office and Resident Agent of the Company shall be as designated in the initial Articles of Organization/Certificate of Organization or any amendment thereof. The Registered Office and/or Resident Agent may be changed from time to time. Any such change shall be made in accordance with the Statutes, or, if different from the Statutes, in accordance with the provisions of this Agreement. If the Resident Agent shall ever resign, the Company shall promptly appoint a successor agent.

 

  1. Capital Contributions and Distributions. 

    The Member may make such capital contributions (each a “Capital Contribution”) in such amounts and at such times as the Member shall determine. The Member shall not be obligated to make any Capital Contributions. The Member may take distributions of the capital from time to time in accordance with the limitations imposed by the Statutes.

 

  1. Books, Records and Accounting.

 

a)     Books and Records.  The Company shall maintain complete and accurate books and records of the Company's business and affairs as required by the Statutes and such books and records shall be kept at the Company's Registered Office and shall in all respects be independent of the books, records and transactions of the Member.

 

b)     Fiscal Year; Accounting.  The Company's fiscal year shall be the calendar year with an ending month of December.

 

 

  1. Member's Capital Accounts. 

    A Capital Account for the Member shall be maintained by the Company. The Member's Capital Account shall reflect the Member’s capital contributions and increases for any net income or gain of the Company. The Member’s Capital Account shall also reflect decreases for distributions made to the Member and the Member’s share of any losses and deductions of the Company.

 

  1. U.S. Federal / State Income Tax Treatment. 

 

 

The Member intends that the Company, as a single member LLC, shall be taxed as a sole proprietorship in accordance with the provisions of the Internal Revenue Code. Any provisions herein that may cause the Company not to be taxed as a sole proprietorship shall be inoperative.

 

 

  1. Rights, Powers and Obligations of Member.

 

  1. Authority.  __________________, as sole member of the Company, has sole authority and power to act for or on behalf of the Company, to do any act that would be binding on the Company, or incur any expenditures on behalf of the Company.

 

  1. Liability to Third Parties.  The Member shall not be liable for the debts, obligations or liabilities of the Company, including under a judgment, decree or order of a court.

 

  1. Rights, Powers and Obligations of Manager.

 

  1. The Company is organized as a “member-managed” limited liability company. 
     
  2. The Member is designated as the initial managing member.

 

  1. Ownership of Company Property.  

    The Company’s assets shall be deemed owned by the Company as an entity, and the Member shall have no ownership interest in such assets or any portion thereof.  Title to any or all such Company assets may be held in the name of the Company, one or more nominees or in “street name”, as the Member may determine.

 

  1. Other Activities. 

    Except as limited by the Statutes, the Member may engage in other business ventures of any nature, including, without limitation by specification, the ownership of another business similar to that operated by the Company. The Company shall not have any right or interest in any such independent ventures or to the income and profits derived therefrom.

 

 

  1. Limitation of Liability; Indemnification.

 

 

a)     Limitation of Liability and Indemnification of Member.

 

  1.  

The Member (including, for purposes of this Section, any estate, heir, personal representative, receiver, trustee, successor, assignee and/or transferee of the Member) shall not be liable, responsible or accountable, in damages or otherwise, to the Company or any other person for: (i) any act performed, or the omission to perform any act, within the scope of the power and authority conferred on the Member by this agreement and/or by the Statutes except by reason of acts or omissions found by a court of competent jurisdiction upon entry of a final judgment rendered and un-appealable or not timely appealed (“Judicially Determined”) to constitute fraud, gross negligence, recklessness or intentional misconduct; (ii) the termination of the Company and this Agreement pursuant to the terms hereof; (iii) the performance by the Member of, or the omission by the Member to perform, any act which the Member reasonably believed to be consistent with the advice of attorneys, accountants or other professional advisers to the Company with respect to matters relating to the Company, including actions or omissions determined to constitute violations of law but which were not undertaken in bad faith; or (iv) the conduct of any person selected or engaged by the Member.

 

  1. The Company, its receivers, trustees, successors, assignees and/or transferees shall indemnify, defend and hold the Member harmless from and against any and all liabilities, damages, losses, costs and expenses of any nature whatsoever, known or unknown, liquidated or unliquidated, that are incurred by the Member (including amounts paid in satisfaction of judgments, in settlement of any action, suit, demand, investigation, claim or proceeding (“Claim”), as fines or penalties) and from and against all legal or other such costs as well as the expenses of investigating or defending against any Claim or threatened or anticipated Claim arising out of, connected with or relating to this Agreement, the Company or its business affairs in any way; provided, that the conduct of the Member which gave rise to the action against the Member is indemnifiable under the standards set forth in Section 10(i). 

 

  1. Upon application, the Member shall be entitled to receive advances to cover the costs of defending or settling any Claim or any threatened or anticipated Claim against the Member that may be subject to indemnification hereunder upon receipt by the Company of any undertaking by or on behalf of the Member to repay such advances to the Company, without interest, if the Member is Judicially Determined not to be entitled to indemnification under Section 10(a)(b).

 

  1. All rights of the Member to indemnification under this Section 10(a)

 shall (i) be cumulative of, and in addition to, any right to which the Member may be entitled to by contract or as a matter of law or equity, and (ii) survive the dissolution, liquidation or termination of the Company as well as the death, removal, incompetency or insolvency of the Member.

 

  1. The termination of any Claim or threatened Claim against the Member by judgment, order, settlement or upon a plea of nolo contendere or its equivalent shall not, of itself, cause the Member not to be entitled to indemnification as provided herein unless and until Judicially Determined to not be so entitled.

 

 

  1. Death, Disability, Dissolution.

 

  1. Death of Member.  Upon the death of the Member, the Company shall be dissolved.  By separate written documentation, the Member shall designate and appoint the individual who will wind down the Company’s business and transfer or distribute the Member's Interests and Capital Account as designated by the Member or as may otherwise be required by law.

 

  1. Disability of Member.  Upon the disability of a Member, the Member may continue to act as Manager hereunder or appoint a person to so serve until the Member's Interests and Capital Account of the Member have been transferred or distributed.

 

  1. Dissolution.  The Company shall dissolve and its affairs shall be wound up on the first to occur of:

 

  1. At a time, or upon the occurrence of an event specified in the Articles of Organization or this Agreement.

 

  1. The determination by the Member that the Company shall be dissolved. 

 

  1. Miscellaneous Provisions.

 

  1. Article Headings.  The Article headings and numbers contained in this Agreement have been inserted only as a matter of convenience and for reference, and in no way shall be construed to define, limit or describe the scope or intent of any provision of this Agreement.

 

  1. Entire Agreement.  This Agreement constitutes the entire agreement between the Member and the Company. This Agreement supersedes any and all other agreements, either oral or written, between said parties with respect to the subject matter hereof.

 

  1. Severability.  The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provisions were omitted.

 

  1. Amendment.  This Agreement may be amended or revoked at any time by a written document executed by the Member.

 

  1. Binding Effect.  Subject to the provisions of this Agreement relating to transferability, this Agreement will be binding upon and shall inure to the benefit of the parties, and their respective distributees, heirs, successors and assigns.

 

  1. Governing Law.  This Agreement is being executed and delivered in the State of ______________ and shall be governed by, construed and enforced in accordance with the laws of the State of ______________.

 

IN WITNESS WHEREOF, the Member has hereunto set such Member's hand as of the day and year first above written.

 

 

____________________________, LLC

 

 

Managing Member’s Signature: __________________________________________

 

 

Print Name: __________________________________________

 

 

ACKNOWLEDGMENT OF NOTARY PUBLIC

STATE OF ______________________

_____________ County, ss.

 On this ____ day of _______________________, 20___, before me appeared ____________________, as Managing Member of this LLC Operating Agreement and who proved to me through government issued photo identification to be the above-named person, in my presence executed foregoing instrument and acknowledged that they executed the same as their free act and deed.

      ____________________________

      Notary Public 

      My commission expires: _____________

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