What Should My LLC Operating Agreement Include?

By Bill Stilwell · Last reviewed October 16, 2026

The short answer

An operating agreement is the written rulebook for a limited liability company (LLC). It says who owns what, who makes which decisions, how money goes in and comes out, how ownership can be transferred, and how disputes get settled. The U.S. Small Business Administration (SBA) says it’s widely recommended even where your state doesn’t require it, and that includes single-member LLCs.

What this means

The outline asks you to define ownership, authority, contributions, distributions, transfers, and disputes.

Ownership: Each member’s percentage and how it’s measured (see 6.2.1 Ownership Percentages and Capital Contributions).
Authority: Who manages the LLC, what each person can decide alone, and what needs a vote (see 6.2.3 Decision-Making Authority and Voting).
Contributions: What each member put in, like cash, equipment, or work, and whether more can be required later.
Distributions: When and how profit is paid out, and whether money is held back for taxes or reserves.
Transfers: Whether a member can sell or give away their share, and who gets first chance to buy it (see 6.2.6 Buy-Sell Provisions).
Disputes: How disagreements and deadlocks get resolved, such as mediation before court (see 6.2.5 Deadlock Procedures).

Good agreements also cover who owns intellectual property and accounts, confidentiality, what happens if a member dies or becomes disabled, and how to dissolve the LLC (see 6.2.7 Intellectual-Property Ownership and 6.2.8 Confidentiality Obligations).

SBA notes that some states may require an LLC to dissolve and re-form when membership changes unless the agreement says otherwise. That alone is a reason to have one.

Example: a two-owner landscaping LLC (made up for this page) writes that each owner has 50 percent, either can spend up to a set amount alone, larger spending needs both, the Google Business Profile and domain are owned by the LLC under a shared business login, and a departing owner must sell their share back at a formula set in the agreement.

Why it matters

Without one, state default rules apply. They may split profits or decide votes in ways you didn’t intend.
Single-member LLCs need it too. It shows the LLC is separate from you and says who can run it if you can’t.
Banks and lenders often ask for it. Some won’t open an account or lend without it.
Owner splits get ugly without it. Fights over money, equipment, clients, and online accounts are common.
Taxes depend on it. For an LLC taxed as a partnership, the Internal Revenue Service (IRS) treats the agreement as part of how income is shared, and it says changes for a tax year can be made up to the return’s due date, not counting extensions.

Who this applies to

Every LLC. Partnerships need a similar partnership agreement (see 8.6.2 Partnership). Corporations use bylaws and shareholder agreements instead (see 8.7.3 Bylaws or Resolutions).

How to do it

Make your decisions first. Ownership split, management style, spending limits, pay, distributions, and exit rules.
Decide who owns accounts and intellectual property. Write that the LLC owns its name, logo, domain, website, content, Google Business Profile, social accounts, and customer data (see 14.3.8 Profile Ownership and 13.1.2 Registrar Ownership).
Choose a starting draft. An attorney’s draft is best. A template can work for a simple single-member LLC, but read every line.
Fit it to your state’s LLC law. Some default rules can only be changed in writing.
Have a certified public accountant (CPA) review the money sections, especially distributions and tax allocations.
Have every member sign and date it.
Store the signed copy in your formation folder (see 8.7.1 Formation Documents).
Record ownership in the ownership ledger to match (see 8.7.4 Ownership Ledger).
Follow it. If the agreement says big purchases need two signatures, actually get them.
Review it every year and amend it in writing when anything changes.

What proof to keep

The signed and dated operating agreement
Every signed amendment
Your ownership ledger
Records of contributions and distributions
Written approvals for decisions the agreement says need a vote

Common mistakes

Downloading a template and never reading it. It may say things that don’t match how you work.
Skipping it because you’re the only owner. It still matters for liability, banks, and what happens if you can’t work.
Leaving out who owns the accounts. The person who set up the Google Business Profile or domain may claim it later.
No exit plan. Without buyout rules, a member leaving can freeze the business.
Not updating it. New members, new roles, or new money arrangements need a written amendment.
Ignoring it in practice. An agreement you don’t follow can create problems in a dispute.

When to get help from a pro

An attorney should draft or review it, especially with more than one member. A CPA should review the money and tax sections. Ask the attorney:

What does our state’s LLC law say if our agreement is silent on a topic?
Does our agreement clearly give the LLC ownership of its name, domain, and online accounts?

Ask the CPA:

Do our distribution and allocation rules match how we want to be taxed?

Bill’s note

[Bill: add a short story or opinion. For example, a client who lost access to a Google Business Profile after a co-owner left, or the account ownership language you’d want in any agreement.]

If you’d rather have this done for you, SiteSmarty sets up Google Business Profiles owned by the business, with backup managers.

How I did this for SiteSmarty

[Date I did this:]
[What I actually did, step by step: who drafted it, key decisions, account ownership language]
[What it cost and how long it took:]
[What surprised me or what I’d do differently:]
[Screenshot or photo to add, with private info blurred: signed operating agreement table of contents]
[Result so far:]

Questions people ask

Do I need an operating agreement if I’m the only owner? It’s often not required, but SBA says it’s widely recommended. It helps show the LLC is separate and says who can run it if you can’t.

Is an operating agreement required by law? It depends on the state. Many states don’t require one, but your state’s default rules apply if you don’t have one.

Can I use a template? For a simple single-member LLC, maybe. Read every line, and have an attorney review it if there’s more than one owner.

Who owns the business’s online accounts? Whoever your agreement and account setup say. Write that the LLC owns them and set them up under business logins.

How do I change an operating agreement? Follow the amendment process the agreement describes, usually a written amendment signed by the members.

Audit check

Question: Does the LLC have a signed, current operating agreement covering ownership, authority, contributions, distributions, transfers, disputes, and ownership of accounts?
Pass looks like: Signed by every member, amendments for every change, an ownership ledger that matches, account ownership clearly assigned to the LLC, and decisions made the way the agreement says.
Fail looks like: No agreement. An unread template. Missing signatures. Out of date after an ownership change. No mention of who owns accounts.
Evidence to collect: Signed agreement and amendments, ownership ledger, and records of two recent major decisions.

Where this fits

Do this first: 8.7.1 Formation Documents, 6.2.1 Ownership Percentages and Capital Contributions, 6.2.3 Decision-Making Authority and Voting

Do this next: 8.7.3 Bylaws or Resolutions

Sources

U.S. Small Business Administration, "Choose a business structure" (checked October 16, 2026)
U.S. Small Business Administration, "Register your business" (checked October 16, 2026)
IRS, Publication 541, Partnerships (checked October 16, 2026)

This page explains general rules and Bill's own experience. It is not legal, tax, or insurance advice. Talk to a qualified professional about your situation.