A Maryland LLC operating agreement isn't required by state law, and it doesn't even need to be in writing. But skipping one hands control to Title 4A default rules that rarely match how LLC owners actually run their business.
Choose the version that matches your Maryland 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 Maryland Law Require an LLC Operating Agreement?
No. Maryland doesn't force LLC owners to adopt an operating agreement. Under Md. Code, Corporations and Associations Article § 4A-402, members “may” enter into one. The word “may” is doing all the work in that sentence.
What makes Maryland unusual is the policy behind that law. Section § 4A-102 declares that Title 4A's purpose is to give “maximum effect to freedom of contract and the enforceability of operating agreements.” That language tells courts to respect whatever the members agree to, an unusually strong signal compared to most states.
Here's the part that catches people off guard: under § 4A-402(b)(2), the agreement doesn't even need to be a written document. An oral or implied operating agreement is valid in Maryland unless the Articles of Organization specifically require a writing. Most states assume the opposite. Aaron Kra, JD, Boost Suite's legal editor, calls this one of the most misunderstood points about Maryland limited liability company formation because nearly every competing page presents the document as exclusively written.
So why bother putting anything on paper? Banks, the IRS, and lenders won't accept a handshake. Opening a business bank account for a Maryland LLC almost always requires a signed document. And if a dispute reaches court, proving the terms of an oral agreement is expensive and unpredictable.
I have seen Maryland’s rule on unwritten operating agreements surprise even experienced attorneys. The statute technically allows it, but every bank I have worked with across 25+ states has required a signed operating agreement before opening an LLC account. My recommendation is always the same: put the agreement in writing, date it, and keep a signed copy with your Articles of Organization. Maryland gives you flexibility, but I would never treat that flexibility as an invitation to skip the paperwork.
Maryland Default Rules That Apply Without an Operating Agreement
Skip the operating agreement and Maryland fills every gap with default rules from Title 4A. Those defaults won't match most founders' expectations.
Voting Rights and Decision Thresholds
Under § 4A-403, members vote in proportion to their profit interests. Ordinary business decisions require a majority of those interests. Bigger moves need two-thirds consent, including:
- Disposing of all or substantially all company property or business assets
- Approving a merger or conversion to a different entity
Certain actions require unanimous written consent under § 4A-404: voluntary bankruptcy, assigning LLC property for the benefit of creditors, altering profit or loss allocations, and any act making it impossible to carry on the ordinary business. That writing requirement can't be waived without a properly adopted operating agreement that restructures the consent rules.
An operating agreement can shift to per-capita voting (one member, one vote) or create a management structure that better reflects each person's actual role.
Profit and Loss Allocations
Section § 4A-503 allocates profits and losses among members in proportion to their respective capital contributions. Distributions follow the same ratio. On paper, that sounds fair. In reality, it creates problems when one partner contributes cash and another contributes services, equipment, or intellectual property with no documented value.
A single paragraph in the operating agreement assigning a dollar value to non-cash contributions prevents that fight.
Member Withdrawal and the Six-Month Notice Rule
Maryland's default withdrawal rule under § 4A-605 requires at least six months of prior written notice to the other members. The operating agreement can shorten it, extend it, or prohibit withdrawal entirely.
Worth flagging: most first-time LLC owners don't realize they can't simply walk away on short notice. Six months is a long time when a business relationship has already deteriorated. A well-drafted operating agreement specifies buyout terms and a realistic time frame for an exit.
| Provision | Default Rule (No OA) | With Operating Agreement |
|---|---|---|
| Voting basis | Profit interests (§ 4A-403) | Any structure the members choose |
| Ordinary decisions | Majority of profit interests | Custom threshold (e.g., per-capita) |
| Major transactions | Two-thirds consent | Custom (e.g., 75% or unanimous) |
| Profit/loss split | Proportional to capital contributions (§ 4A-503) | Any agreed allocation |
| Withdrawal notice | 6 months' written notice (§ 4A-605) | Custom period or buyout trigger |
| Dissolution trigger | 90 days with no members (§ 4A-902) | Custom events or continuation clause |
What to Include in a Maryland LLC Operating Agreement
A Maryland operating agreement should include the provisions below. Each one connects to a specific Title 4A section and addresses a default rule that owners typically want to override.
Company Name, Resident Agent, and Principal Office
The LLC name in the operating agreement must match the Articles of Organization exactly, including punctuation. Maryland law uses the term “resident agent” in its statute, not “registered agent.” Section § 4A-204 requires the Articles to list the agent's name and address plus the LLC's principal office address in Maryland.
If the LLC plans to choose a registered agent service rather than naming an individual member, the agreement should identify the provider and include a clause authorizing changes without a full amendment.
Capital Contributions and Ownership Percentages
This section documents what each person contributes at formation: cash, property, services, or a combination. Because § 4A-503 ties default profit allocations to capital contribution values, getting this clause right prevents disputes down the line.
For multi-member LLCs, the agreement should also address future contributions and capital calls. Maryland law is silent on mandatory additional contributions unless the operating agreement says otherwise. Founders planning to start an LLC in Maryland with a business partner should negotiate these terms before filing.
Distributions, Tax Allocations, and the $300 Annual Report
Distribution clauses set the timing, priority, and method for paying out LLC profits. For pass-through entities, a tax distribution clause is common. It ensures members receive enough cash to cover their personal income tax liability on LLC earnings before any discretionary distributions.
One thing to watch: Maryland charges a $300 annual report filing fee starting the year after formation, due every April 15. The operating agreement won't change that obligation, but it should clarify which member or manager is responsible for filing the Form 1 Annual Report. A full breakdown of formation and ongoing expenses is available in Boost Suite's Maryland LLC cost guide.
Membership Interest Transfers and the 2022 Transfer-on-Death Fix
By default, only an economic interest in a Maryland LLC is assignable under § 4A-603. An assignee receives distribution rights but doesn't gain voting rights, management authority, or access to company records unless admitted as a full member under § 4A-604.
The real differentiator for Maryland is the 2022 legislative fix. Before Chapter 295 / SB 261 took effect, a Maryland appellate court ruled in Potter v. Potter that a transfer-on-death clause in an operating agreement could fail as testamentary. The 2022 fix explicitly says death transfers under an operating agreement are effective according to the document's terms.
I saw the Potter v. Potter decision scare a lot of Maryland LLC owners, and rightfully so. Before the 2022 fix, a death-transfer clause in an operating agreement could be thrown out if it did not comply with Maryland estates and trusts rules. Since that legislation passed, I have updated dozens of family LLC agreements to include transfer-on-death provisions that are now clearly protected. If you own a Maryland LLC with family members, I would not treat this as a minor clause or something to deal with later.
Dispute Resolution and Arbitration
Maryland law doesn't require a dispute resolution clause, but including one saves time and money when disagreements arise. Most multi-member operating agreements include a mediation-first step, followed by binding arbitration if mediation fails.
Without a dispute clause, members default to state court litigation, which is slower and more expensive. For LLCs where the members also work in the business day to day, internal conflicts can paralyze operations. A clear resolution process keeps decisions moving.
Dissolution Triggers and the 90-Day No-Member Rule
Section § 4A-902 lists four dissolution events: an event stated in the Articles or operating agreement, unanimous member consent, a judicial decree, or 90 consecutive days with no members. If a sole member dies or withdraws without a succession plan, the LLC has 90 days before automatic dissolution.
A continuation clause overrides that default. For single-member LLCs, this is arguably the most important provision in the entire document.
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Single-Member vs. Multi-Member Maryland LLCs
Maryland is unusually explicit about single-member LLC operating agreements. Under § 4A-402(d)(3), an agreement with only one member isn't unenforceable just because one person is the sole party. The LLC itself doesn't need to execute the document to be bound.
For veil-piercing purposes, the Serio v. Baystate Properties decisions illustrate Maryland's approach: courts are reluctant to impose personal liability on a sole member absent fraud or serious disregard of the LLC form. A signed operating agreement documenting capital contributions and separation of funds strengthens that protection.
Multi-member LLCs face a different risk. Silence on voting, allocations, and withdrawal terms means every gap defaults to Title 4A's rules. The most common problem is the profit-interest voting default, because it gives disproportionate control to the partner with the largest capital contribution. Owners who want equal say in daily management need to specify that in writing.
Member-Managed vs. Manager-Managed: Maryland's Public-Authority Drafting Trap
Maryland's default structure is functionally member-managed. Under § 4A-401, each member is an agent of the LLC for the purpose of its business, and usual-course acts bind the company. Switching to a manager-managed LLC requires the operating agreement to grant exclusive authority to designated managers.
The catch is specific to Maryland. Limiting member authority in the operating agreement alone isn't enough to protect the LLC from third-party claims. Section § 4A-204(a)(3) allows the Articles of Organization to include a statement that member authority is limited. That creates a public-record signal; without it, an outsider dealing with a member has no reason to know about the internal restriction.
Best practice for a manager-managed Maryland LLC: the operating agreement assigns management authority, and the Articles include the § 4A-204(a)(3) limitation statement. Aaron Kra, JD, notes this two-document approach is more defensible, especially after the Supreme Court of Maryland's Plank v. Cherneski ruling confirmed that managing members owe common-law fiduciary duties based on agency principles.
Nonmember managers are also permitted under § 4A-402(a)(1). That's useful for LLCs where passive investor-members want a hired executive running daily operations. Before naming a resident agent or choosing a management structure, it helps to verify your LLC name through Maryland's entity lookup tool.
How the October 2026 Sales-Tax Rule Changes the Calculus
A 2025 legislative change creates a new practical reason to adopt or update a Maryland operating agreement. HB 15 / Chapter 198, effective October 1, 2026, revises Tax-General § 11-601 to expand personal liability for unpaid sales-and-use tax.
The short version: if a Maryland LLC doesn't have an operating agreement, personal liability for uncollected sales tax can extend to all members. If the LLC does have an agreement that identifies who manages the business and its affairs, liability narrows to those specific individuals.
That distinction didn't exist before this legislation. For LLCs that collect sales tax, the existence of a written operating agreement now directly affects which persons carry personal tax exposure.
I consider this genuinely new territory. Before HB 15, whether a Maryland LLC had an operating agreement did not factor into sales-tax liability analysis. Starting October 1, 2026, it does. I have already started advising clients to review their existing agreements and make sure the management clause clearly identifies who runs the company’s day-to-day operations. If your LLC collects sales tax in Maryland, I would not wait until September to make updates.
How to Draft and Adopt a Maryland LLC Operating Agreement
Drafting the agreement doesn't require an attorney, though Boost Suite recommends professional review for multi-member LLCs with complex capital structures.
All persons who are members at the time of adoption must agree to the initial operating agreement under § 4A-402(b)(1). For a single-member LLC, that means one signature. For multi-member LLCs, every member signs.
Amendments require unanimity if the agreement is silent on the amendment process. Maryland adds a wrinkle under § 4A-402(c): if the amendment wasn't adopted by unanimous consent, or if an economic interest has been assigned to a nonmember assignee, the amendment must be in a signed writing. That rule trips up LLCs that bring in investors without updating their amendment procedures.
The finished document doesn't get filed with the Maryland State Department of Assessments and Taxation (SDAT). It stays in the LLC's internal records alongside the Articles of Organization. No notarization is required.
For owners still in the formation stage, Boost Suite's guide on how long it takes to get an LLC in Maryland covers processing times and expedited filing options through SDAT. Standard review takes 7 to 10 business days; same-day rush adds $325 online.
Download Boost Suite's free Maryland LLC Operating Agreement template (PDF & Word): Single-Member | Multi-Member | Manager-Managed
Choose the version that fits your LLC structure.
Frequently Asked Questions About Maryland LLC Operating Agreements
These are the questions Maryland LLC owners ask most often. Each answer cites the relevant state statute.
Can a single-member LLC have an operating agreement in Maryland?
Yes. Section § 4A-402(d)(3) expressly validates a single-member operating agreement. The LLC itself doesn't need to execute the document to be bound by its terms.
Does a Maryland LLC operating agreement need to be notarized?
No Maryland statute requires notarization. A signed and dated document is sufficient. Some banks may request notarized copies for their own records, but that's a lender requirement, not a state one.
Do you file a Maryland operating agreement with SDAT?
No. The operating agreement is an internal governance document. Only the Articles of Organization are filed with the Maryland State Department of Assessments and Taxation.
Can a Maryland LLC operating agreement be oral?
Technically, yes. Under § 4A-402(b)(2), the agreement doesn't need to be in writing unless the Articles of Organization require it. But an oral agreement creates serious proof problems in disputes and won't satisfy banks, the IRS, or most third parties. Boost Suite strongly recommends a written, signed version for every Maryland LLC.
What happens if a Maryland LLC member dies without a transfer-on-death clause?
The deceased member's membership interest becomes part of their estate. Only economic rights transfer by default under § 4A-603; governance rights don't follow. Since the 2022 legislative fix (Chapter 295 / SB 261), transfer-on-death clauses in operating agreements are protected from being treated as testamentary.
How much does it cost to form a Maryland LLC?
The Articles of Organization filing fee is $100. Expedited processing adds $50 (7 to 10 business days); same-day rush adds $325 online. The annual report fee is $300, due April 15 starting the year after formation. A complete fee breakdown is available in the Maryland LLC formation services review.
- Md. Code, Corps. & Ass'ns § 4A-402 (operating agreement provisions)
- Title 4A, Maryland Limited Liability Company Act (full text)
- SDAT fee schedule for Maryland business filings
- Maryland Business Express: register a business
- Plank v. Cherneski, Supreme Court of Maryland (2020)
- 2022 Chapter 295 / SB 261 (transfer-on-death fix)
- Tax-General § 11-601 (sales-tax responsible-person rule, effective Oct. 1, 2026)
- Maintain Good Standing Status, Maryland Business Express
Looking for an overview? See Maryland LLC Services
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