Sample Limited Liability Company LLC Operating Agreement with company assets divided into ownership shares
Understanding this form
The Sample Limited Liability Company (LLC) Operating Agreement is a legal document that outlines the management structure and operating procedures of an LLC with ownership shares divided among its members. This form serves as a vital resource for LLC members to clarify roles, responsibilities, and the distribution of profits and losses, which differentiates it from other legal agreements such as traditional partnership agreements. It ensures that all members understand their rights and obligations while minimizing potential disputes.
Main sections of this form
- Company name and term of existence
- Management structure and responsibilities of members
- Purpose of the LLC operation
- Asset ownership and profit-loss allocation
- Withdrawal and assignment of membership interests
- Indemnification and liability clauses for members
When to use this form
This form is needed when establishing a Limited Liability Company to formalize the relationship among its members and outline how company assets and profits will be managed, particularly when ownership is divided into shares. You should use this operating agreement when starting a new LLC, bringing on additional members, or restructuring an existing LLC to ensure clear management guidelines and protect personal liabilities.
Who can use this document
- Individuals forming a new Limited Liability Company
- Existing LLC members looking to establish or revise the operating agreement
- Small business owners seeking clarity around roles and profit-sharing
- Anyone wanting to ensure compliance with state regulations regarding LLC operations
Completing this form step by step
- Clearly state the name of the LLC and the date of formation.
- List all members' names and their corresponding business addresses.
- Define the percentage ownership for each member.
- Outline the management structure, specifying roles of each member.
- Include details regarding profit and loss allocations based on ownership percentages.
- Ensure all members sign the agreement to make it legally binding.
Does this document require notarization?
In most cases, this form does not require notarization. However, some jurisdictions or signing circumstances might. US Legal Forms offers online notarization powered by Notarize, accessible 24/7 for a quick, remote process.
Common mistakes to avoid
- Failing to include all members' names and signatures.
- Not specifying the ownership percentages accurately.
- Omitting terms related to profit and loss distribution.
- Leaving out provisions for future changes in membership or management.
- Neglecting state-specific filing requirements if applicable.
Benefits of using this form online
- Convenient downloading of customizable templates tailored by licensed attorneys.
- Access to reliable, up-to-date legal forms that comply with state laws.
- The ability to easily edit and tailor the agreement to meet specific needs.
- Quick turnaround time as forms are available instantly online.
Legal use & context
- This operating agreement is enforceable as a binding contract among members of the LLC.
- It outlines the operational framework and management duties, helping prevent disputes.
- Members are protected from personal liability for the company's debts and obligations.
Key takeaways
- The operating agreement is essential for the structure and management of an LLC.
- Clearly defining ownership and management roles can prevent future legal issues.
- Using an online form can simplify the creation and revision of this agreement.
Glossary of terms used in this form
- Limited Liability Company (LLC): A business structure that protects its owners from personal liability while providing tax advantages.
- Members: Individuals or entities that own shares in the LLC.
- Operating Agreement: A document outlining the management structure and operational procedures of an LLC.
- Profits and Losses: Financial gains and losses allocated to members based on their ownership percentages.
Form popularity
FAQ
Every member of the LLC and the manager or managers (if there are any) need to sign the operating agreement. Each signatory should sign a separate signature page.Learn how to properly sign business documents on your state's LLC formation page.
1. Divide ownership of the LLC by calculating total cash investment by the members. Give each member an ownership stake equal to his cash investment. Four members contributing $25,000 apiece would each receive a 25 percent stake in the company.
The core elements of an LLC operating agreement include provisions relating to equity structure (contributions, capital accounts, allocations of profits, losses and distributions), management, voting, limitation on liability and indemnification, books and records, anti-dilution protections, if any, restrictions on
The multi-member LLC is a Limited Liability Company with more than one owner. It is a separate legal entity from its owners, but not a separate tax entity. A business with multiple owners operates as a general partnership, by default, unless registered with the state as an LLC or corporation.
Member Financial Interest. What percentage ownership does each member have? Corporate Governance. Corporate Officer's Power and Compensation. Non-Compete. Books and Records Audit. Arbitration/Forum Selection. Departure of Members. Fiduciary duties.
Percentages of Ownership In return, each LLC member gets a percentage of ownership in the assets of the LLC. Members usually receive ownership percentages in proportion to their contributions of capital, but LLC members are free to divide up ownership in any way they wish.
Get together with your co-owners and a lawyer, if you think you should (it's never a bad idea), and figure out what you want to cover in your agreement. Then, to create an LLC operating agreement yourself, all you need to do is answer a few simple questions and make sure everyone signs it to make it legal.
By default, an LLC's profits are allocated in proportion to ownership interests. For example, if two LLC members each own 50 percent of the LLC, half of the profits is allocated to each owner. If an LLC does not specify an alternative method, this is how the company must allocate its profits.
Unlike most business organizations, absent an agreement by all of the members of the LLC, ownership percentage has no real effect in terms of the governance and financial benefits. To increase the traditional benefits associated with ownership, control and financial return, you need to amend the operating agreement.
