Single Member Llc Operating Agreement Template Free
Single Member Llc Operating Agreement Template Free – A single member LLC operating agreement puts key information about your LLC in writing. Many websites that try to sell you LLC forms and services will tell you that if you do not have a single member LLC operating agreement, you will lose protection. That is a complete lie.
The protection of your assets depends on two things: the provisions of your state LLC and the separation between you and your single member LLC. Your operating agreement won’t change any of these things, but it will be useful for more mundane tasks, like opening a bank account.
Single Member Llc Operating Agreement Template Free
We have made every effort to simplify and minimize redundant and obtuse language often found in single-member LLC operating agreements. We have created the minimalist single member agreement. You can easily complete this form in less than 5 minutes. Like all our shapes, this model is designed for individual use.
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We also offer LLC operating agreement templates for specific types of LLCs, such as multi-member LLCs and manager-managed LLCs. Like our single member LLC operating agreement, these templates are easy to complete and understand.
An operating agreement is an internal document. So, unlike your Articles of Organization, you will not have to submit this form to any government agency. However, your bank may require your operating agreement to open an account. Other people you do business with may also request to see it.
A common and fundamental misunderstanding about the single member LLC operating agreement is that this document gives much more power than it actually does. In fact, your operating agreement will not take precedence over the law, no matter what it says. So you won’t lose your limited liability coverage just because you don’t have an agreement. And you won’t be able to evade the law just because you say some dubious behavior (like using your business account as your personal piggy bank) is okay in your agreement.
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You could too! It won’t hurt. In any case, taking the time to read our operating agreement will help ensure that you properly consider first steps (such as contributions) and potential possibilities (such as divorce). Your bank may want to see it, and it’s free, so you better have it. But please do yourself a favor and don’t pay a lot of money for a single member LLC operating agreement.
If you are going to pay for something, pay for a service that will truly benefit your LLC. We provide registered LLC agent services in all states. We provide online tools to help keep your LLC in compliance. We also form an LLC for $100 plus state fees.
Your single member operating agreement should include information on contributions, accounting, administration, dissolution, and more. Our free single member LLC operating agreement template covers the essential LLC topics you need:
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Even if you created your LLC, you still have to “buy it out”. In other words, you will finance the LLC with money or other assets (initial capital contribution) in exchange for your ownership interest. You will include the full value of your contributions in this section.
You are in business to make money: This section explains how and when you get your money. Profit and loss are determined and allocated annually. After paying expenses and any liabilities, you can make distributions at any time. If your business or membership interest is liquidated, the distribution follows Treasury Regulations.
As the only member, you run the show. This section describes your powers (control, management, direction, operations, etc.) and your responsibilities (contract signing, record keeping, etc.).
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This article also states that (if you have acted in good faith), you are not personally liable for loss or damage to the LLC or for costs resulting from lawsuits or other actions against the LLC.
Although it may appear that you and the LLC are the same, it is important to maintain a clear distinction. This article notes that if you incur an out-of-pocket expense or provide a service to the LLC, you may be entitled to a refund or compensation.
This section explains how to keep financial records, including capital accounts and distributions. At the end of each calendar year, you’ll close the books and prepare a membership statement (yes, just for you, but these kinds of records are important).
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Imagine the worst case scenario where creditors sue your LLC, who are then awarded membership interest. This article establishes that these interests do not include the right to participate in the management or operation of the LLC. Creditors would only get the distribution (and only until the debt is paid).
You can terminate your LLC at any time through the dissolution process. This section notes that upon dissolution, the LLC is responsible for paying off debts before any distribution is made.
This is the signature page. By signing, you acknowledge that you agree to abide by the terms of the operating agreement.
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At the end of the single member operating agreement, there are also fill-in-the-blank schedules. These screens include places to enter your membership information (your name, address, and ownership percentage) and details of your capital contributions.
A single member LLC can lose its liability protection if the owner fails to maintain true separation from the LLC. Translation: If you own a one-member LLC and pay for all your personal things out of the LLC’s checking account, you’re opening yourself up to a judge who may say that you and the LLC are the same entity.
No single member LLC operating agreement will save you if you use your LLC bank account to pay for personal items like entertainment, meals, personal vacations, etc. If you use your LLC bank account as your personal piggy bank, you’ll lose liability protection, even if you pay a lawyer $5,000 for a fancy one-member LLC operating agreement.
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The best way to protect your assets from the shares of a single member LLC is to keep everything completely separate. It is simple. Pay for personal items with your own money. If the single member LLC has expenses, the single member LLC pays those expenses from the single member LLC checking account.
We make! We have templates for meeting minutes, articles of organization, and more. Or select “LLC Forms” for a full list of the free forms we offer for LLCs.
We store the cookies that our website needs to function and we never sell data to third parties. For more information, please see our Privacy Policy or read about Privacy by Default® A Single Member LLC Operating Agreement is a form used to record the details of a newly formed limited liability company with one (1) member. . From the way it is funded to the rules for adding a new member, the form contains a number of key provisions that describe the governance of the organization. Once completed, the form is retained by the entity/holder; operating agreements do not need to be filed with the secretary of state.
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A single member LLC is a type of business entity that is a common alternative to a sole proprietorship. A single-member LLC provides several benefits to its owner, especially since the owner is a separate entity from the business itself (shielding them from most liabilities). At tax time, the entity is recognized as a “defaulting entity”. This means that the IRS “ignores” the business itself, requiring LLC owners to report the entity’s income and expenses on their own personal tax returns, in the form of Schedule C.
The process for starting a single member LLC is very similar to a multi-member LLC. The process can vary from state to state, but generally consists of the following steps:
The first step in forming an LLC is its name. The owner can use the state entity search to find the name that fits their business. The name can be practically anything, as long as it is not prohibited by state law. Most state laws require entities to include “LLC”, “L.L.C.”, “Ltd. Liability Co.” or other similar words/abbreviations at the end of the company name. If the owner isn’t ready to introduce new entities but finds the perfect name, they can reserve the name (usually for a fee).
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The registered agent can be almost any person or entity, as long as they live in the state where the LLC is filed, are available during normal business hours, and are at least 18 years old (applies to individuals only). LLC members often choose to designate a registered agent other than themselves because it provides a means for them to choose someone who will always be around to receive lawsuits, documents, and other important communications.
The articles of organization (they have different names depending on the state) are the ones that must be filled out with the state to acknowledge that the LLC is real and valid. This can often be completed online for a fee.
Although rarely required by the state, this step is one of the most important to ensure that the owner clearly explains the goals, governance rules, and other important factors of an LLC. Some of the topics covered in the operating agreement include profit/loss, distribution, onboarding new members, compensation (salaries), administration, and more.
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This step is mandatory for entities
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