While an operating agreement does not need to follow a specific layout, there is a generally accepted framework for structuring the contract.

Name and Formation

This establishes the basic details of the company and includes the date of formation, as well as the state in which it was founded. Furthermore, the registered agent’s name and place of business should also be included.

Members and Duties

If the entity is a multi-member LLC, the members and duties section will include the full names of each member and their personal addresses. While optional, each member’s duties can be established to ensure everyone clearly understands their roles within the company.

Capital Contributions and Ownership

The amount given by a member to fund the company during the start-up stage should be detailed in the agreement. Each member’s ownership percentage should be stated near the beginning of the document. The sum of all percentages must equal 100%.

Voting Rights

For multi-member LLCs, the operating agreement should include the process for voting on major decisions, who has the right to cast votes, and what majority is required to pass a vote.

Distributions

A distribution is a share of profit that is delivered to a member at the end of the tax year. It is typically equivalent to their ownership percentage of the business. The agreement should state when and how distributions are made.

Membership Changes

Establishes the process for adding or removing a member from the LLC, when members can sell or transfer their shares, what happens if a member dies, and other member-related procedures.

Dissolution

Provides guidance as to what circumstances will dissolve the LLC and how that will be conducted and supervised.