Table of Contents
Write a comment
hi everybody I'm attorney Aiden Kramer with the law office of Aiden Kramer in Colorado welcome to the magical world of all up in your business I've talked a lot in previous episodes about the importance of an operating agreement in an LLC particularly in a single-member LLC the operating agreement for an LLC is essentially the written agreement of the members about how to operate the LLC so it may seem odd for a single-member LLC to have an operating agreement because it's not like there's going to be any votes the single members not going to disagree with anybody the single member can for the most part do whatever they want with the company but an operating agreement nonetheless is very very important in a single-member LLC Colorado doesn't require an operating agreement for single member LLC's or for any LLC's for that matter but some states do require them and even if it's not required it's still an important piece of paperwork to have for your LLC in a single-member LLC the primary purpose of the operating agreement is to help uphold the limited liability that an LLC provides the operating agreement helps to avoid piercing the corporate veil which I've talked about in previous episodes so what I'm going to do today is walk through a sample operating agreement so you guys know some of the important points that should be made in your single member LLC's operating agreement first let's start with the basics your operating agreement should include your business's name the address of the business the registered agents information and the business purpose all of this information should also be reflected on the articles of organization that were filed to create the LLC and the business purpose is the purpose of the business what kind of a business are you going to be operating what are you going to be doing my operating agreement for example would say that I'm going to be operating a law practice focusing on business transactions and estate planning so whatever the purpose whatever you're going to be doing in your business that's what your business purposes your operating agreement should also reflect whether the LLC is going to be member managed or manager managed if you're unsure about which one your LLC is or what it should be check back to my previous videos because I have one explaining the difference between member and manager managed LLC's the operating agreement should also include information about the owners or the members of the LLC and the percentage breakdown for each one obviously since you're the only member in it you own a hundred percent but your operating agreement should reflect that you are one hundred percent owner of the LLC you also want to include information about how the LLC is going to be taxed are you going to leave it as a disregarded entity or are you going to elect to be taxed as an S corporation or a C corporation whatever you decide should be in the operating agreement your operating agreement should also include information about the contributions that you've made to the LLC if you contributed a lump sum of cash or if you're just contributing services and your own knowledge your operating agreement should reflect whatever your contributions are you'll want to put information in your operating agreement about distributions how are you going to take distributions are you going to take a lump sum distribution on a regular schedule weekly monthly quarterly are you going to take it whenever you decide to in a certain amount the terms of how you want to take those distributions should be stated in your operating agreement your operating agreement should also state if certain actions taken by the LLC need to be consented to in writing by you the member states may require a written consent to certain actions they may not that you can specify in your operating agreement what types of transactions what types of purchases what types of actions need to be consented to by you in writing also want to include information about meetings of the members you're the only member so you can hold a meeting really whatever you want but if you want to commit to having annual meetings by yourself you can put that in the operating agreement or you can state in the operating agreement that anything that could be done in a meeting can be done in a writing in lieu of a meeting whatever you decide should be stated though in your operating agreement liquidation and dissolution of the LLC should also be addressed in the operating agreement when can you dissolve the LLC if you decide to do so what steps need to be taken when you do dissolve and unwind the LLC all of those steps all of those requirements that you may impose on yourself or that your state may impose on you should be included in the operating agreement you also want to address what will happen if you decide to transfer ownership of the LLC either partial or complete ownership so if you later decide to take on a business partner and you want to make that business partner a 50% owner your operating agreement should describe under what circumstances you can transfer that ownership what steps need to be taken to do that and anything else regarding transferring the ownership of membership interests in the LLC and finally your operating agreement should state how the operating agreement can be amended if later on down the road you want to change some of these terms that you've written into your operating agreement your operating agreement should say how you make those amendments obviously you're the only owner so you can decide on your own without talking to anybody else that you want to amend it but if your operating agreement states that you need to consent to amending it in writing then you need to do that before amending the operating agreement now those are certainly not all of the things that need to be included in your single-member operating agreement those are just a few of the more important things that are typically a part of the operating agreement there are a lot of sample operating agreements available online I don't recommend that that you use them just as a complete template but they can help to be a starting point in drafting your operating agreement but of course as always I recommend working with an attorney to do it so you know that everything's been covered and they are operating agreement is in compliance with state law if your state does have requirements for an operating agreement if you're in Colorado and you would like help with your operating agreement or anything else regarding your business you can contact me my phone number and email are below thank you all for watching I'm Aiden Kramer and I will see you next time
Thanks for your comment Barabara Montesano, have a nice day.
- Felton Puffett, Staff Member
hi and we're going to show you how to write a single-member LLC operating agreement now what is a single-member LLC operating agreement it is a form that is used with every LLC that is formed in all states is the only form that states who the owners in this case who the owner is of an LLC and it is even though you may be saying well I'm a single member I'm gonna be listed as the only member at the state level as you can see it is required in these states California Delaware Maine Missouri and New York even if you are a single member and it's a very important document to help prove your personal assets from your business assets because pretty much if you have an LLC that doesn't have an operating agreement and someone tries to question that authorities such as the IRS is being a separate entity from your personal assets it's very hard unless you have this form and it's free it's easily to fill out and we're gonna do it hopefully less than five minutes for you so the best way to do it is actually write in Adobe PDF if you just want something simple that's gonna say you're the owner and that you have any lawful and legal business but if it's going to be a little complicated then probably you want to download the Microsoft Word version so date we will just write in here and as you can see all you have to do is just write right in where the blanks are so party we will call it Appleseed muskets LLC in the state of we will call it Texas so as you can see it's just very generic the company name is Apple but did we have it up here Appleseed muskets LLC and the articles of organization from the company were filed with the Secretary of State the state of again Texas and we'll say it was filed on May 1st 2015 principal office address 1 2 3 Apple Bill Lane will states and Houston Texas 1 2 3 4 5 comma there see as you can see it's just very generic the company's initial designated office will be again you just write the 1 2 3 Apple Villa Houston and its initial agent for service this is the registered agent this is pretty person who'll be in charge of answering any notices on your behalf so you can write that address there and if the company's designated office within its agent for service of process may only be changed by filing those to change the secretary of state of Texas which the inter Google's the company were filed I'm just gotta breezing through this because it's just very generic name and address the sole member so this would be you the owner so you'd write your name and address Johnny Appleseed we will say 1 Hickory Road Houston Texas 1 2 3 4 6 so you can just keep going through as you can see this is just all very generic information that must be in the operating agreement so we're just going down till we see a blank again we got to enter the state again Texas on to the laws of Texas name of the number Johnny Appleseed you'll sign here and you'll want to have at least two witnesses and then at the very bottom this is actually very highly recommended is to actually have a notary you do your signature and it's what's called as being notarized because this is the best for legal authority and that is it that is how you can download a free single-member LLC operating agreement and fill it out
Thanks Mana your participation is very much appreciated
- Felton Puffett
About the author
I've studied logic and foundations of mathematics at Utah Tech University in St. George and I am an expert in theoretical physics. I usually feel shocked. My previous job was transportation attendants I held this position for 4 years, I love talking about motor sports and judo. Huge fan of Rachel Maddow I practice cheerleading and collect prizes.
Try Not to laugh !
Joke resides here...