An Indiana LLC operating agreement defines ownership, management, and profit distribution for your limited liability company. Indiana doesn’t require one. But after a 2025 Supreme Court ruling, putting it in writing matters more than ever.
Choose the version that matches your Indiana LLC structure and download it in PDF or Word format. Each template is designed to help you document ownership, management, and internal rules more clearly from day one.
Does Indiana Law Require an Operating Agreement for Your LLC?
No. Indiana imposes no legal obligation to adopt an operating agreement before or after forming an LLC. The document isn’t required under Indiana Code Title 23, Article 18.
That said, “optional” is misleading. Indiana’s Business Flexibility Act defines an operating agreement as a written or oral agreement among members concerning the LLC’s affairs (IC 23-18-1-16). Both formats are recognized. But nearly every provision that gives LLC owners real legal power won’t activate without a written operating agreement.
Under IC 23-18-4-4, only a written operating agreement can modify or eliminate fiduciary duties, establish indemnification protections, create officer positions, or grant approval rights to non-members. IC 23-18-4-2 reinforces this by tying liability protections and duty-of-loyalty rules to written provisions. Indiana also requires each LLC to keep copies of any written operating agreement at its principal office (IC 23-18-4-8).
One more reason to care: IC 23-18-4-13 declares that Indiana’s policy is to give maximum effect to the freedom of contract and the enforceability of operating agreements. Translation: Indiana courts will respect what you put in writing. The catch is that you actually have to put it in writing first.
Indiana technically allows oral operating agreements, but I would not rely on that if ownership is supposed to be clear from day one. After the 2025 Nemeth v. Panzica ruling, that distinction became far more important for anyone forming an Indiana LLC.
I watched the Indiana Court of Appeals take the opposite view a year earlier and treat oral arrangements more favorably. But the Indiana Supreme Court later vacated that decision and made the rule much stricter: under the Business Flexibility Act, LLC membership requires either a written operating agreement or written consent.
That is why my advice for any Indiana LLC formed today is simple: put the operating agreement in writing before you open a bank account, move money into the business, or let anyone act like an owner.
If membership matters, I want it documented in writing before the LLC starts operating. That is the cleanest way to avoid the kind of ownership dispute that turned into litigation in Nemeth.
What the 2025 Nemeth Ruling Changed for Indiana LLC Members
In November 2025, the Indiana Supreme Court decided Andrew Nemeth Properties, LLC v. Panzica (Case No. 24S-PL-356). A real estate broker helped form an LLC with three business partners but never signed a written agreement confirming his membership interest. When the partnership fell apart, the other members executed a backdated operating agreement that excluded him.
In 2024, the Indiana Court of Appeals reversed the trial court, reasoning that oral contracts could establish initial LLC membership under the Business Flexibility Act. That decision didn’t last. The Supreme Court granted transfer and vacated it. Its holding: IC 23-18-6-1 governs all LLC membership, and that statute requires either a written operating agreement or written consent of all existing members.
For Indiana LLC owners, the practical takeaway couldn’t be clearer. Even though the statute still defines “operating agreement” to include oral agreements (IC 23-18-1-16), membership itself now requires proof in writing. Any guide that suggests otherwise is relying on the vacated appellate opinion, not current law.
What to Include in an Indiana LLC Operating Agreement
Every Indiana operating agreement should cover a core set of provisions specific to how the business actually operates. Unlike corporations, limited liability companies don’t have bylaws; the operating agreement is the governing document that controls property, profits, and internal decision-making. Below are the sections that matter most under Indiana’s statutory framework.
Company Purpose, Registered Agent, and Principal Office
Start with the LLC’s legal name, which must match the Articles of Organization filed with the Indiana Secretary of State (State Form 49459). Include the company’s stated purpose, its principal office address, and the name and street address of its registered agent.
Indiana requires every LLC to maintain a registered agent and registered office with a physical street address in the state. A P.O. Box alone won’t satisfy this rule. The LLC can’t serve as its own registered agent, either. For owners still choosing an agent, Boost Suite’s guide to the best registered agents in Indiana covers the top options.
Membership Interest, Ownership, and Capital Contributions
This section documents each member’s ownership percentage and initial capital contribution. It’s where misunderstandings between co-founders usually start, and where the operating agreement earns its keep.
Here’s the thing: Indiana’s default allocation rule isn’t a 50/50 split. Under IC 23-18-5-3, profits and losses are allocated by the agreed value of each member’s contributions as reflected in company records. That means if one member contributed $100,000 and another contributed $20,000, the default split tracks those amounts, not an equal share.
| Category | Default Rule (No OA) | With Written Operating Agreement |
|---|---|---|
| Profit allocation | By agreed value of contributions (IC 23-18-5-3) | Any split the members choose |
| Loss allocation | Same contribution-based ratio | Custom allocation permitted |
| Distribution timing | No guaranteed schedule | Members can set quarterly, annual, or event-based triggers |
Distributions and Indiana’s Solvency Limit
Unless the operating agreement says otherwise, Indiana distributes profits using the same contribution-based formula from IC 23-18-5-4. Members can override this default with any distribution schedule they prefer.
One restriction can’t be overridden. IC 23-18-5-6 bars any payout if the company will be unable to pay its debts as they come due after the distribution. Members who approve an insolvent distribution may face personal liability; the solvency test applies regardless of what the operating agreement says.
Voting Rights and Majority-in-Interest Decisions
In a member-managed Indiana LLC, ordinary business decisions require a majority in interest vote (IC 23-18-4-3). “Majority in interest” ties voting power to each member’s economic stake, not a head count.
Certain actions still require unanimity unless a written operating agreement changes the rule. Amending the operating agreement tops that list, along with authorizing acts that contradict its terms. As provided in the agreement, members agree on these thresholds at formation and can adjust them later through a written amendment signed by everyone.
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Choosing Between Member-Managed and Manager-Managed in Indiana
Indiana LLCs default to member-managed unless the Articles of Organization specifically provide for one or more managers (IC 23-18-4-1). This isn’t a choice you can make solely in the operating agreement. The management structure must appear in the formation filing itself. A manager managed LLC requires that designation in the Articles; without it, Indiana treats the entity as a member managed limited liability company by default.
Under a manager-managed arrangement, managers don’t need to be members of the LLC or even natural persons. A corporation or another LLC can serve as manager. The operating agreement should then define the scope of the manager’s authority, voting procedures among multiple managers, and any decisions reserved for the members.
Indiana’s statute also lets the operating agreement grant exclusive management authority to managers who aren’t members (IC 23-18-4-5). That’s useful for investor-backed LLCs where passive members contribute capital while a professional operator runs the business day to day.
Worth flagging: a member of a manager-managed LLC who isn’t also a manager has no duties to the company or other members under IC 23-18-4-2(c). That protection only applies, however, if the Articles of Organization properly designate the manager-managed structure. If they don’t, every member carries fiduciary duties by default.
One mistake I have seen repeatedly with Indiana LLCs is this: founders choose a manager-managed structure in the operating agreement, then forget to declare that structure in the Articles of Organization.
That creates a real legal mismatch. Under IC 23-18-4-1, the Articles are what control on this point. If your Articles do not mention managers, your LLC is member-managed by law, regardless of what the operating agreement says.
I always tell clients to handle this in the right order. File the Articles first, confirm the management designation, and then draft the operating agreement to match. If those documents do not line up, you are creating authority problems before the company even starts operating.
- Whether the LLC is meant to be member-managed or manager-managed
- Whether the Articles of Organization clearly state that choice
- Whether the operating agreement mirrors the same structure without conflict
How Indiana Lets You Customize Fiduciary Duties in Writing
Indiana is unusually flexible on this point. Under IC 23-18-4-4, a written operating agreement can modify, increase, decrease, limit, or eliminate the duties of members and managers, including fiduciary duties.
Compared to most states, that’s a broader grant of contractual freedom. Many jurisdictions cap customization at a “duty of good faith” floor. Indiana’s statute doesn’t impose that explicit limit, though courts applying the Business Flexibility Act have generally expected members and managers to act in good faith when exercising their powers.
The same section authorizes indemnification provisions. A written operating agreement can protect members and managers from personal liability for judgments, settlements, penalties, and legal expenses arising from their roles. Without this clause, Indiana’s default liability rules under IC 23-18-4-2 apply, and those defaults only shield against claims that don’t involve willful misconduct or recklessness. A generic template from another state won’t account for Indiana’s specific duty-modification rules under IC 23-18-4-4.
Succession Planning for Single-Member Indiana LLCs
Indiana clearly permits LLCs to have a single member, but solo owners face a planning problem that most template pages skip over. Indiana statutes list several events that trigger cessation of membership, including death, withdrawal, and removal. If the sole member dies or becomes incapacitated, the LLC may be left with zero members. Under IC 23-18-9-1.1, that triggers dissolution unless specific steps are taken within 90 days.
The 90-day window allows the personal representative or assignee of the last member’s interest to continue the company by admitting a new member or taking other action allowed under the operating agreement. In a multi-member LLC, the remaining members can vote to continue; for a single-member LLC, that safety net doesn’t exist without a written succession clause.
In 2024, Indiana passed SEA 18 / P.L. 99-2024, which updated the assignee admission rules under IC 23-18-6-4.1. The amendments created a more workable path for assignment of interest in single-member LLCs. A sole owner can now transfer 100% of the LLC’s interest without the entity becoming memberless. Before this change, that transfer often left a legal gap where no member existed, even briefly.
Bottom line: a single-member Indiana LLC operating agreement should include a succession clause that names a specific successor and grants authority to the member’s personal representative. It should address both death and incapacity. Without it, the LLC’s continued existence depends on a 90-day clock and whatever Indiana’s default rules allow.
The complete guide to starting an LLC in Indiana covers the full formation process, including how the Articles of Organization interact with succession planning.
How the Operating Agreement Connects to Indiana’s Other Filing Requirements
The operating agreement sits alongside several other documents that define the LLC’s legal and compliance posture in Indiana.
- Articles of Organization (State Form 49459): This is the formation document filed through INBiz, the Indiana Secretary of State’s online filing portal. The online filing fee totals $95 ($75 statutory fee plus a $20 Enhanced Access fee). Paper filing costs $100. The LLC’s name, registered agent, and management structure in the Articles must align with the operating agreement. If they don’t, you’ve created legal vulnerability before the business even opens.
- Business Entity Report (Form 48725): Indiana uses this term instead of “annual report.” The report is due every two years during the anniversary month of formation. Online filing costs $32 ($20 statutory fee plus $11 Enhanced Access fee). Failure to file can lead to administrative dissolution. For a deeper breakdown, see the full cost guide for Indiana LLCs.
- EIN application (IRS Form SS-4) : The Internal Revenue Service (IRS) issues this number free of charge, and most banks won’t open an LLC bank account without it. If the LLC elects S-corp tax treatment, IRS Form 2553 is the follow-up filing. The operating agreement should reflect whatever tax classification the members choose. Indiana LLCs taxed as pass-through entities also register with the Indiana Department of Revenue for state tax obligations.
- Recordkeeping under IC 23-18-4-8 : Indiana law requires the LLC to keep written operating agreements, amendments, member lists, and three years of tax returns at its principal office. Members have the right to inspect these records. Before filing, confirm your LLC name is available through the Indiana business name search on INBiz.
For expected processing times on Indiana LLC filings, Boost Suite maintains an updated timeline based on current INBiz turnaround data.
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Free Indiana LLC Operating Agreement Templates (PDF & Word)
Choose the version that fits your LLC structure.
- Single-member template: Best for solo owners who need a written record of their membership, capital contribution, and succession plan. After Nemeth, this isn’t optional; it’s the minimum every Indiana sole owner should have on file.
- Multi-member template: Designed for multi member LLCs with two or more owners. Covers profit allocation, voting thresholds, and the process for admitting or removing members. Pre-configured with Indiana’s contribution-based default allocation.
- Manager-managed template: Use this if the Articles of Organization designate one or more managers. Includes sections on officer roles, manager authority limits, and decisions reserved for members.
Don’t skip the allocation section; fill it in, have all members sign the agreement, and keep a copy at the LLC’s principal office as required by IC 23-18-4-8.
Owners who prefer a full-service formation can compare the top-rated LLC services in Indiana for packages that include a customized operating agreement.
The most common template mistake I see with Indiana LLCs is using a generic 50-state form that defaults to equal profit splits. That sounds harmless until the members’ actual contributions are not equal.
Indiana’s default rule does not assume a 50/50 split. Under IC 23-18-5-3, profits are allocated by the agreed value of each member’s contributions as reflected in the company’s records, not equally.
If your template assumes equal sharing but the members did not contribute equal value, you have already created a mismatch between your operating agreement and what Indiana law would otherwise provide. I always tell clients to verify the allocation clause before anyone signs, because this mistake usually stays hidden until the money starts moving.
A broad 50-state form often assumes profits are divided equally unless someone manually rewrites the clause.
Indiana defaults to allocations based on the agreed value of each member’s contributions, not automatic equal economics.
I make sure the allocation clause matches the real business deal and Indiana’s statutory framework. If the members want something other than a contribution-based split, the operating agreement should say that clearly in writing.
Frequently Asked Questions About Indiana LLC Operating Agreements
Indiana’s rules on LLC operating agreements sit at the intersection of statutory defaults, recent case law, and practical compliance steps. An operating agreement isn’t legally required, but the questions below explain why most Indiana LLC owners treat it as essential. These are the issues Boost Suite’s editorial team encounters most often.
Is an operating agreement legally required for an Indiana LLC?
No. Indiana doesn’t mandate an operating agreement for LLC formation or ongoing compliance. However, a written operating agreement is the only way to unlock protections under IC 23-18-4-4, including fiduciary duty customization and indemnification. Skipping it means relying entirely on state defaults.
Can an Indiana LLC operating agreement be oral?
The statute (IC 23-18-1-16) still defines operating agreements as written or oral. But after the Indiana Supreme Court’s 2025 decision in Nemeth v. Panzica, membership itself requires written proof. An oral agreement may cover some internal governance details, but it can’t establish who the LLC’s members are.
Does an Indiana operating agreement get filed with the Secretary of State?
No. The operating agreement is an internal document that stays with the LLC, not a public filing. IC 23-18-4-8 requires a copy to be kept at the LLC’s principal office, but the Indiana Secretary of State doesn’t collect or review it.
Does the operating agreement need to be notarized?
Indiana imposes no notarization requirement. Signatures from all members (and managers, if applicable) are sufficient. Notarization doesn’t hurt, but it isn’t legally necessary to make the agreement enforceable.
How does Indiana split profits if there’s no operating agreement?
By the agreed value of each member’s capital contributions as reflected in company records (IC 23-18-5-3). This is different from many states that default to equal shares. If one member invested $80,000 and another invested $20,000, the default split is 80/20, not 50/50.
Can a single-member LLC have an operating agreement in Indiana?
Yes, and Boost Suite strongly recommends it. Single member LLCs benefit from a written operating agreement that documents the sole owner’s membership (critical after Nemeth), establishes a succession plan, and provides written evidence of the LLC’s separate legal existence. The 2024 SEA 18 amendments also improved assignee admission rules for single-member transfers.
What happens if an Indiana LLC loses all its members?
Under IC 23-18-9-1.1, the LLC faces dissolution unless the personal representative or assignee of the last member’s interest takes action within 90 days. That action can include admitting a new member or continuing the business under the terms of the operating agreement. Without a succession clause, the 90-day window is the only safety net.
- Indiana Secretary of State, Business Services Division (INBiz)
- Indiana Code Title 23, Article 18, Chapter 4: Rights and Duties of Members and Managers
- IC 23-18-4-4: Written Operating Agreement provisions
- Andrew Nemeth Properties, LLC v. Panzica, Indiana Supreme Court, No. 24S-PL-356 (Nov. 6, 2025)
- Indiana Secretary of State: Business Forms (State Form 49459)
- Indiana General Assembly: Indiana Code, Title 23
Looking for an overview? See Indiana LLC Services
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