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Govern your LLC with a member-managed operating agreement. Required by most banks to establish accounts, this document specifies how all members will participate in business decisions and share management responsibilities. Select your state for legally compliant operating agreement templates.
A Member-Managed LLC Operating Agreement is the internal governance document that enables all LLC members to participate equally in managing the business. Unlike articles of organization (which are filed with the state), the operating agreement is a private contract among members that defines voting rights, decision-making authority, and each member's management responsibilities.
This is the default and most common management structure for small LLCs where all owners want a hands-on role. It establishes how members vote on business decisions, what happens when members disagree, and how day-to-day operations are handled. Most banks, lenders, and business partners require a written operating agreement before doing business with your LLC.
A well-drafted member-managed operating agreement prevents disputes by documenting ownership percentages, profit-sharing formulas, and exit procedures before disagreements arise. It covers capital contributions, distribution schedules, procedures for admitting new members, buyout provisions, and dissolution — giving your LLC the legal structure needed to operate professionally and protect all members' interests.
A member-managed LLC Operating Agreement is an internal contract among the LLC's owners ("members") that sets out how the company will be owned, managed, and operated when all members participate in day-to-day decisions. It typically addresses ownership percentages, capital contributions, profit and loss allocations, voting rights, management duties, and procedures for admitting or removing members. This document is usually not filed with the state; it is kept with the LLC's records and signed by the members. Even in states where an Operating Agreement is not legally required, having a written agreement is strongly recommended to avoid disputes and to show banks, lenders, and other third parties how your LLC is structured.
In a member-managed LLC, all members have authority to participate in day-to-day business decisions and act on behalf of the company, unless the Operating Agreement limits that authority. This is the default structure in many states. In a manager-managed LLC, the members appoint one or more managers (who may or may not be members) to run daily operations, while most members are passive investors. If you want every owner to be actively involved in management, you generally choose a member-managed structure and use a member-managed Operating Agreement like this one.
This form is generally appropriate if: all owners will actively participate in running the business; you want each member to have management authority (subject to any limits you choose); and your Articles of Organization (or equivalent state filing) indicate that the LLC is member-managed or do not specify a manager-managed structure. If your Articles of Organization state that the LLC is manager-managed, or if most owners will be passive investors and only certain individuals will manage the business, you should instead use a manager-managed Operating Agreement.
Many states do not require an Operating Agreement to be filed or even to be in writing, but some states either require an Operating Agreement or strongly recommend having one. Regardless of whether your state mandates it, having a written Operating Agreement is considered a best practice and is often requested by banks, investors, and other parties. In most states, this document is not filed with the Secretary of State or other filing office; it is an internal governance document. A small number of states (such as New York, California, and Maine) may impose additional requirements or filings related to LLC governance.
Yes. This member-managed Operating Agreement is designed to be customized to reflect the specific arrangements among your members. You can typically: set different ownership percentages for each member; allocate profits and losses in proportion to ownership or according to another agreed formula; define how votes are counted (for example, one-member-one-vote or voting based on ownership percentage); and specify which actions require unanimous consent, a majority vote, or a supermajority. For complex ownership or tax structures, you may wish to consult an attorney or tax advisor.
After you complete the form, each member should review it and sign it in the manner required by your state (for example, in the presence of a notary if recommended or required). Once executed: keep the original signed Operating Agreement with your LLC's permanent records; provide a copy to each member and, if needed, to your accountant, bank, or other advisors; and refer to the agreement when making important decisions, handling member changes, or resolving disputes. You generally do not file the Operating Agreement with the state. However, if your state requires any related filing or notice, follow your state's instructions and deadlines.