Once you’ve made the decision to form a limited liability company (LLC), you should learn about LLC operating agreements. An LLC operating agreement is one of the most important formation documents you’ll create. There are a lot of ways to draft your LLC operating agreement, but one of the easiest is using an LLC operating agreement template.
To make sure you get the most from using an operating agreement template, I’ve combed through hundreds of templates for operating agreements and made a list of the eight best operating agreement templates.
1. Northwest Registered Agent
Northwest Registered Agent’s LLC operating agreement was easily the best option I found. First of all, it’s easily accessible. You don’t have to sign up with Northwest Registered Agent to access their template, which is nice and saves time.
You can get a template in Google Docs or Word format. It’s easy to use their custom operating agreement template, especially if you choose the Google Docs version. Just click the link and you can access the entire document.
And it’s quite easy to customize the template. If you choose the Google Docs format, you can customize elements straight from your web browser. If you choose the Word version, simply download the form, open it, and begin customizing it.
One of the best things about Northwest’s template is that you have so many options to customize it from their site. They allow you to choose a generalized template, a state-specific template, or templates that specify whether you want to run a single-member LLC, a multi-member LLC, or a manager-managed LLC.
And to top it all off, it’s a truly free LLC operating agreement template, and you can’t beat free, right?
Click here to check out Northwest Registered Agent’s operating agreement template.
2. LLC University
LLC University provides you with a lot of options when it comes to choosing your operating agreement template.
Choose from three different formats: Google Docs, Word, or PDF. And as a custom operating agreement template, it’s easy to use these documents and customize them. All you have to do is click and type whatever you want to add to the document if you choose the Google Docs version, but if you choose Word or PDF files you’ll need to download them before you can customize them.
LLC University is another business that doesn’t require you to sign up or make an account to access their template, which makes it easily accessible to everyone.
And best of all, it’s a completely free LLC operating agreement template.
3. How to Start an LLC
The LLC operating agreement template from How to Start an LLC is quite easy to get your hands on, and to customize, which is why it’s in my #3 spot.
If you just want to get your hands on a generic single-member LLC operating agreement template, all you have to do is download a Word or PDF file. It’s a free LLC operating agreement template, so there aren’t any surprise fees.
If you’d like a customizable operating agreement template, they do require you to sign up for an account. However, they don’t require you to pay for any of their services or give you a free trial. It’s just free, period. And signing up for an account with them also gives you access to a number of free legal forms, which makes it worth the time.
Click here to check out the operating agreement template from How to Start an LLC.
This is a nice option if you want a free LLC operating agreement template. They don’t require you to sign up or make an account to use their template, which means you can get to it right away without any hassle or fees to worry about.
The reason I can’t put this template further up my list is that it doesn’t offer many format options. The only choice you get is Google Docs. While that makes the form customizable and easy to use, you don’t get the same freedom that you do with Northwest Registered Agent’s LLC operating agreement.
To check out Collective’s LLC operating agreement template, click here.
FindLegalForms is #5 on my list because although I had hoped that their LLC operating agreement template would be better than some of the others on my list, they let me down.
First, it’s worth noting that FindLegalForms’ LLC operating agreement template isn’t free, and it makes no bones about that. But they don’t charge you a monthly subscription fee, either. Instead, you’ll pay a one-time fee of $19.95 for their template.
Second, you don’t get very many format types to choose from for your LLC operating agreement. They offer Word, WordPerfect (which I didn’t even know people were still using, honestly), PDF, or Rich Text Format. If you want to use a Google doc without having to download a file to your computer, you’re out of luck.
And, lastly, FindLegalForms’ template for operating agreements is so far down my list because you can’t customize it. It uses a wizard system that asks you questions about your LLC management structure, membership interest, ownership percentage, and business model, as well as what should happen if a new member comes to the company and whether your LLC will be owned by one member or multiple members. Then, it generates your LLC operating agreement for you. So, you can’t change it in any way, which is really annoying. The only choice you have to change the LLC operating agreement is to either create a new operating agreement or start the wizard over again.
It’s easy to use FormSwift’s wizard to create an LLC operating agreement. It asks a ton of questions about your limited liability company, such as information about LLC members and their capital contributions and ownership interest, ownership and member duties of other members, and financial and working relations of each LLC member, as well as whether you’ve chosen a single-member or multi-member LLC. FormSwift’s wizard also asks about requirements for bringing in new members, instructions for filing the annual report, who has the authority to manage company affairs, company property, and registered agent service, as well as the business name and a list of the LLC’s members or owners if there are multiple owners.
There are a couple of reasons that FormSwift’s template for operating agreements is so far down my list.
The first is that, while it’s free and easy to use, you have to create an account to download and access your LLC operating agreement once you’ve gone through the process of answering all the questions. That means it’s not as easily accessible as some of the other templates for an LLC operating agreement on my list.
The other reason FormSwift earned my #6 spot is that the LLC operating agreement it generates isn’t customizable. You’re just out of luck if you want to change it or add something to it later, because you’ll have to go through the whole process again to generate a new operating agreement.
You can learn more about FormSwift’s LLC operating agreement template here.
7. Rocket Lawyer
Rocket Lawyer does provide a template to help you create the LLC operating agreement for your limited liability company, but it’s not the best template available.
It uses the wizard-style creator to generate your operating agreement, which means you’ll have tons of questions to answer. You’ll be asked to list the members and their capital contributions, member duties of other members, mailing address of your business, business name, membership interests of your members, instructions for filing your annual report, information about your registered agent, and business structure, as well as questions about whether your limited liability company will be managed by a sole member or by multiple members.
This is an easy process, but the problem is that you can’t access your LLC operating agreement easily. You have to make an account. Not only that, you have to sign up for a free trial of Rocket Lawyer’s services. After the seven-day trial is up, you’ll pay $39.95 for their services.
Besides helping you create an LLC operating agreement, they also offer access to other important legal documents and even provide legal advice, so it may be worth it to you to pay for their services. However, for the purposes of ranking this operating agreement template, since they charge money for their template, it’s hard for them to compete against companies that provide free templates.
Another point against Rocket Lawyer’s template is that you can’t customize your operating agreement. It simply generates your operating agreement based on the answers you provide. While that’s easy and somewhat convenient, it means that you can’t change it to meet your needs.
And you only get one format option. You’ll have to download your LLC operating agreement from Rocket Lawyer rather than choosing from a Google doc or a few types of downloadable forms.
You can check out Rocket Lawyer’s LLC operating agreement template here.
One of the perks of this LLC operating agreement template is that you just enter some information and answer some questions and it generates a downloadable operating agreement from your answers.
There are several reasons this template is in last place. First, there are a LOT of questions to get through before it generates your template. It asks about ownership and member duties, names of business partners and LLC owners, profit distribution instructions, company assets, management details, and information about voting interests. It also asks for the principal office address, the ownership interest of each LLC member, the financial and working relations of all the members, the business name, and the names of any registered agents you have. It also wants to know whether you’re a single-member LLC or a multi-member LLC and how new members are accepted.
Second, you can’t customize it, either. It’s created from your answers, so hitting the “skip” button really isn’t an option. I honestly have no idea why they included that button because if you do hit it, you’re going to exclude important information from your agreement.
The third and last reason LawDepot’s template is so far down my list is that it’s not truly a free LLC operating agreement template. Once you answer all their questions you’re directed to choose a plan, but if you choose the “free” option, it’s only free for a week before you’re charged $35. You could theoretically cancel your membership before the week is up, but that’s a lot of hassle to go through when there are other templates that are actually free and don’t require you to sign up to use them.
Read more about LawDepot’s operating agreement template here.
There are certain considerations that go into a good operating agreement template. Here are the rating factors I used to choose the best LLC operating agreement templates.
There’s no other way to put it: a company that chooses to charge for their operating agreement template is going to lose out because so many companies offer free templates. I did find one company that charged a one-time fee, rather than a monthly subscription, and it rated better than some of the other companies on my list, but due to other factors it still ranked pretty low.
Ease of access
It can be really annoying to go through the entire process of answering all the questions that a template wizard asks you only to find out at the end that you have to sign up before it will generate your LLC operating agreement and allow you to download it. So, for that reason I factored how easy it was to access your operating agreement.
The companies that allowed you to simply open a Google document in your web browser without signing up for anything or making a payment ranked higher than those that required you to jump through hoops to receive your operating agreement.
It’s nice to have the option to choose what format your LLC operating agreement comes in. Some of the companies on my list allow you to choose from Google Docs, Word, or PDF. Word and PDF files require downloads, which some people may not want to do.
Ease of use
One of the factors I considered was how easy it is to use the template. If you have to answer 9,000 questions before it will generate your LLC operating agreement, it’s not quite as easy as loading a Google doc that you can access nearly instantaneously.
One of the most important factors when it comes to finding a good template is whether you can customize it. Part of the reason people choose templates is that it’s an easy way to create your own LLC operating agreement. It defeats the point of making your own operating agreement if you can’t customize it and write it to suit your needs.
Basic Sections Your Operating Agreement Should Contain
In addition to the five rating factors I used to rate each template, I checked to make sure that each template had six basic sections that most operating agreements contain.
Here are the sections I checked for:
This section identifies each LLC member and defines membership interest and their percentages of profits and losses, as well as company formation information.
This section spells out who is designated to run the business, who is in charge of making major decisions for the company, who should be an LLC manager, and other management information. For more information about LLC management, read my article about member-managed vs. manager-managed LLCs.
Under the capital contributions section of your operating agreement, you’ll provide instructions for how your LLC’s operations should be funded. Capital contributions are contributions in the form of funds or property that members provide for the company.
This section of the legal document describes how the profits should be distributed amongst the members of the LLC.
This section describes how changes to LLC membership should be handled. Is your LLC allowed to add new members? How can LLC members start the process to remove a member? What happens if an LLC member should leave or die?
This is one of the most important sections of the legal document. Whether you plan on dissolving your LLC or not, it’s important to add this section because it details the dissolution process of your LLC.
Of course, you can add other sections to the operating agreement, but these six are the most important. With these six sections you should have the basic instructions necessary to run your business smoothly.
After Creating Your Operating Agreement
What should you do once you’ve drafted your operating agreement or LLC agreement? Your operating agreement or LLC agreement is considered to be an internal document, which means that you won’t be required to file it with the state government, even if you do business in a state that requires you to draft an operating agreement. Instead, you should keep it where you keep your other important formation or business documents. It’s also important that you should provide a copy of your operating agreement to each member of your LLC.
It’s a good idea to review or update your agreement after each major event that happens to or within your company, such as obtaining a new member or losing an existing member. Depending on how you’ve written your operating agreement, it may require all the members to vote in approval of making amendments to the agreement.
Here are some other activities you’ll want to complete once you’ve created your operating agreement:
File Articles of Organization/Certificate of Formation
Depending on where you live, the primary LLC formation document will be called either the Articles of Organization or the Certificate of Formation. Essentially, no matter what it’s called, it’s the same thing. You’ll need to name your business and choose an office address for your company before you fill the form out. You can typically obtain the form from the LLC governing authority in your state, which is usually the Secretary of State. You can usually file online, by mail, or in person, and you’ll be required to pay a filing fee. Some states offer expedited processing, but if yours doesn’t you’ll find that many LLC formation services also offer expedited processing.
Choose a registered agent
Most states require LLCs to name a registered agent in their formation documents. A registered agent is a person or business entity that accepts mail, legal documents, and service of process on behalf of your company during business hours. You have several options when it comes to choosing a registered agent, such as taking on the role yourself or hiring a registered agent service to complete the task for you. If you do take on the role yourself, please note that making one mistake and missing one document or correspondence from a state agency could jeopardize your company’s good standing and ability to legally conduct business in the state.
If you’d like to learn more about registered agents, check out my article about the best registered agents.
Obtain an EIN
If you plan to hire employees or open a business bank account for your LLC, you’ll need an EIN, or employer identification number. With an EIN, your business will also qualify for licenses and permits that it didn’t qualify for without the number, and you can use your business’s EIN in place of your own social security number on many forms to protect your identity. You aren’t required to hire employees to apply for an EIN, it’s just an identification number for businesses that works similarly to a social security number. All you have to do is apply for an EIN from the IRS, using their online application portal Monday–Friday from 7 a.m–10 p.m, fill out the application, and submit it. You can find the application here.
Open a business bank account
Another crucial activity you’ll need to complete is opening a business bank account for your LLC. This is an important step that many business owners skip either because they don’t understand its importance or because they think that using one bank account for both their business and personal financial transactions is somehow more convenient. But having a business bank account that’s dedicated to the financial transactions of your LLC protects and enforces your limited liability protection and keeps your personal assets safe by strengthening the idea that your LLC is a separate legal entity. If you use your personal bank account for business transactions, you pierce the corporate veil and leave yourself vulnerable to personal liability in the event that your company is sued. A business bank account also makes tax season a lot easier because you won’t have to differentiate between personal and business transactions months after they are made.
Get business licenses and permits
Some states require all businesses to register with a governing body (like the Department of Taxation), while others require only businesses that collect sales taxes to register. However, most businesses will be required to apply for business licenses from the state government. You may need to obtain business licenses and permits from your local government as well. To find out about the requirements for licenses and permits in your area, research the local government agencies that have jurisdiction over the area in which you conduct business.
Operating agreements are vital to the continued success of any company, so I advise every LLC to create one. Without a well-planned operating agreement, not only could the limited liability protection of your LLC become jeopardized, there could be a lot of confusion and arguments among your members about countless managerial, financial, or operational aspects of your business. So to save yourself a headache in the future, create your own operating agreement, which is far easier with a template, and the free template from Northwest Registered Agent is by far the best I’ve seen.
Click here for Northwest Registered Agent’s free operating agreement template.
If you’d like to learn more about operating agreements, check out my LLC Operating Agreement article here.
For more information about how to form an LLC, check out my How to Start an LLC article.
And if you’d like to learn more about an LLC formation service that could help you draft your operating agreement and make the entire formation process go more smoothly, check out my Best LLC Services article.