Editor's note: This post was originally published May 26, 2022 and has been updated for accuracy, comprehensiveness, and freshness on May 15, 2026
As a new business owner, you may be wondering whether creating an operating agreement is worth it. Not all states require it, but if you have an LLC, the answer is yes. An operating agreement is a legal document that protects your company. It lists rules for managing and running your business, owner rights and responsibilities, and other important details.
Have you been wondering how to write an operating agreement? You need to follow several steps to protect your business interests. Running your LLC without an operating agreement — or using a poorly written one — can make it harder to define roles and avoid disputes down the road. We’ll go over how to create an operating agreement, why you need one, and what you should include to keep your business running smoothly.
An operating agreement helps you keep the many benefits of using a limited liability company (LLC) business structure. It also clearly defines rules, responsibilities, rights, and other key details of running your business.
Think of it as a rulebook. If anyone has questions, just look at the operating agreement for answers. When creating yours, be sure to check your state’s requirements.
California, Delaware, Maine, and Missouri LLCs must have operating agreements. In New York, LLCs must adopt one within 90 days of creation. Even in states where an operating agreement is optional, creating one for your LLC just makes good sense because it:
Even before forming your LLC, owners need to make a few decisions, as it will affect your business registration and how your business will be taxed. Some decisions you make before you form your business with the state will be things you include in your operating agreement.
In a member-managed LLC, all owners make daily decisions and take part in running the business. In a manager-managed LLC you can choose one or more managers to handle those tasks. In your operating agreement, list how management decisions will be made and who has the authority to make them.
Some business decisions are routine. Others can change your company. If you have more than one member, think about what kinds of decisions you’ll want to vote on. Thinking about expansion? Need a loan? Ready to add or remove members? Considering selling or closing the business? Will you need a simple majority vote or a unanimous decision? Clear voting rules can reduce conflict if members disagree on major business actions.
An operating agreement is a written guide that explains how your business operates. Many business owners choose to create their own operating agreement, especially for simpler LLCs. However, one of our LegalShield® Business Plans can support you in this process by providing access to an experienced provider lawyer for legal advice and consultation.
Before you start creating an operating agreement, you need to collect several key details about your company. Having this information ready ensures your document matches the details you used when forming your business with the state.
Be sure to gather the following:
You might form your LLC in your home state, but you don’t necessarily have to. Every state has its own rules about LLC formation and operations, so choose the state that’s best for you. Whichever state you select, it’s very important to check its laws to ensure you comply. Most states give LLC members lots of flexibility, but some have specific requirements. For example:
You need to decide how your business will handle daily tasks, voting, and financial distributions. Clearly state if the LLC is member-managed or manager-managed and if decisions need a simple majority or a unanimous vote to pass. Your agreement should also explain how members will share profits and losses to prevent unexpected disagreements down the road
Are you finished discussing what you want to include in your operating agreement? While templates can be a helpful starting point, a generic form may not cover complex items like buy-sell provisions or specific tax classifications.
A well-written document helps to protect your interests. Gain peace of mind with a LegalShield plan which covers a provider attorney’s review of your operating agreement. Know that your operating agreement will cover key details and clearly reflect your goals.
Once you’ve drafted and reviewed your operating agreement, all members need to sign it. Each member should have a copy, and the primary copy should be kept with other business documents.
Over time, things can change. You may want to review your operating agreement periodically, especially after major changes. That ensures that everything is up-to-date, in writing. Common major changes include:
Not every situation is as clear-cut as those we just mentioned. Your governance procedures might require a unanimous decision for certain changes, but that requirement could be creating bottlenecks and slowing things down.
You’d probably want to ask a lawyer for advice in complicated situations. But keep in mind that most of them have high fees for a few hours of consultation. LegalShield members get access to legal advice and consultation as part of their subscription, as well as document review.
Creating a strong operating agreement establishes clear rules and protects your LLC. Get legal guidance from our provider lawyers, as well as document review. You can also get answers to other small business questions, debt collection letters, and an annual Business Health Check. ,
With a LegalShield Small Business Plan, you’ll get access to a provider firm in your state at a fraction of the price you’d pay other lawyers. Choose from three affordable plans.
If your LLC is based in California, Delaware, Maine, Missouri, or New York, the answer is yes. Those states require LLCs to have operating agreements. Other states don’t make you create one, but a well-written and legally binding operating agreement has several benefits.
No laws prevent you from writing your own agreement, and many owners choose to do so for simple LLCs. However, just because you can write it yourself doesn't mean you should go it alone. Getting advice and a document review from an experienced lawyer helps ensure your personal assets are truly protected.
Pre-Paid Legal Services, Inc. (“LegalShield”) provides access to legal services offered by a network of provider law firms to LegalShield members through membership-based participation. Neither LegalShield nor its officers, employees or sales associates directly or indirectly provide legal services, representation, or advice. Small Business Legal Plans and certain benefits are not available in all states. See a Small Business Legal Plan contract for a specific state for complete terms, coverage, amounts, and conditions. The information made available in this blog is meant to provide general information and is not intended to provide legal advice, render an opinion, or provide a recommendation as to a specific matter. The blog post is not a substitute for competent legal counsel from a licensed professional lawyer in the state or province where your legal issues exist, and you should seek legal counsel for your specific legal matter. Information contained in the blog may be provided by authors who could be a third-party paid contributor. All information by authors is accepted in good faith, however, LegalShield makes no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability, or completeness of such information.
Content Specialist at LegalShield, creating educational resources about legal and consumer protection topics. She focuses on making complex legal and financial concepts accessible to readers and has contributed to various educational articles on consumer rights and protections.
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