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LLC Operating Agreement--State Survey
1. Does the State require LLCs to have Operating Agreements?
2. Must LLC Operating Agreements be in writing?
Note: "No. No." next to the name of state means that, for this state, the answer to both of the above questions is "no". Also, although an operating agreement may not be required by the state, it is highly recommended that all LLCs with more than one member have a written operating agreement that (at the very least) set forth how profits and losses shall be allocated.
- Alabama: Operating Agreement not required; however, if more than one LLC member, any operating agreement must be written. AL Stat. Section 10-12-24(b).
- Alaska: No. No.
- Arizona: No. No.
- Arkansas: Operating Agreement not required; however, any operating agreement must be written. Ark. Stat. Section 4-32-102(11).
- California: Although there is no clear requirement for an operating agreement in the LLC Act, Cali. Corp. Code Section 17100(a)(1) indicates that a person becomes a new member only by becoming a party to the operating agreement which implies that an operating agreement is necessary for admission of new members. Cali. Corp. Code Section 17001(ab) states that an operating agreement may be written or oral; however, Code Section 17103(a) requires a written operating agreement to set up different classes of LLC members for voting purposes.
- Colorado: No operating agreement required. Operating agreements do not have to be writing except those for single member LLCs (which must be written). Colo. Stat. 70-80-102(11).
- Connecticut: An operating agreement is not required. Generally, an operating agreement can be oral or written; however, Conn. Stat. Section 34-140(c) states that single member LLCs may adopt an operating agreement by adopting a "statement" of the sole member. The inference of this statute is that the operating agreement of a single member LLC must be in writing.
- Delaware: No. No.
- District of Columbia: Any LLC operating agreement must be in writing (although an operating agreement is not required). DC Stat. 29-1001(21) and 29-1008.
- Florida: No. No. Florida Statutes Section 608.423.
- Georgia: Operating agreements are not required. Operating agreements of multi-member LLCs may be oral; however, operating agreements of single member LLCs must be written. Georgia Stat. Section 14-11-101(18). Note: provisions in operating agreements concerning managers must be written (14-11-304) and promises to contribute capital to an LLC must be set forth in the operating agreement to be enforceable (14-11-402(a)).
- Hawaii: No. No.
- Idaho: No. No.
- Illinois: An operating agreement is not mandatory. Generally, the operating agreement need not be in writing; however, for a single member LLC that does not have an outside manager (i.e., a manager who is other than the single member), the LLC operating agreement must be in writing. 805 ILCS 180/15-5(c).
- Indiana: An operating agreement is not mandatory and can be oral; however, there are a number permissive provisions of an operating agreement that, if the members elect to place them in their agreement, must be in writing. Indiana LLC Act, Chapter 4.
- Iowa: Operating agreement not required. An operating agreement must initially be agreed to by all of the members. Unless the articles of organization specifically permit otherwise, an operating agreement shall be in writing. Iowa Stat. Section 490A.703.
- Kansas: No. No.
- Kentucky: An operating agreement is not mandatory. Generally, the operating agreement need not be in writing; however, for a single member LLC that does not have an outside manager (i.e., a manager who is other than the single member), the LLC operating agreement must be in writing. Kentucky Stat. Section 275.015(14).
- Missouri: Missouri specifically requires the members of an LLC to adopt an operating agreement. MO Stat. Section 347.081.1. The operating agreement may be written or oral.
- Montana: No. No.
- Nebraska: Operating agreement not required unless LLC is managed by "managers" as opposed to the LLC members. Neb. Stat. Section 21-2615.
- New Mexico: Operating agreement not required. To be valid, operating agreement must be written. See NM Stat. § 53-19-2 (N). Definitions.
- New York: A written operating agreement is required for LLCs in New York. New York LLC Act, Section 417.
- Ohio. No. No with qualifications. Operating Agreements may be written or oral, except in the case of one-member LLCs where the opearating agreement must be written. Ohio LLC Act Section 1705.01(J). Further, certain terms of an agreement between the members must be in writing for these terms to be effective, such as in the case of allocation of profits and losses. Ohio LLC Act Section 1705.10.
- Oregon. No. No. Or. Stat. Section 63.057.
- Texas. No. No with qualifications. Operating agreements may be written or oral. Through an operating agreement (called "company agreement" in the Texas LLC Act), most provisions of the Texas LLC Act can be modified by agreement of the LLC members. This is significant in two respects. "A member of a limited liability company may not withdraw or be expelled from the company." Section 101.107. Without an LLC agreement providing for same, a member of a Texas LLC cannot withdraw or be expelled. That's a rigid statute. Secondly, "A promise to make a contribution or otherwise pay cash or transfer property to a limited liability company is enforceable only if the promise is (1) in writing and (2) signed by the person making the promise." Section 101.151. The MedLawPlus.com® operating agreement form contains within it any promises of the members to contribute property to the LLC. Company agreements for single member LLCs are enforceable in Texas under Title 3, Section 100.101(1) of the Texas Business Organizations Code.
- Note: This survey is incomplete. Whenever I get time, I add to the list of states.
April 2006
User Comments
From: Olivia
State:Maryland
Posted: 06/20/2008
Subject: LLC Operating Agreement in Maryland
Comment: Information is good but you did not include the State of Maryland. Or does it come under Washington, DC?
Thanks.
From: Henry
State:Oklahoma
Posted: 06/10/2008
Subject: Single member Operation agreement in Oklahoma
Comment: Hi there,
Great information you have here! I was wondering about the state of Oklahoma and what the law says about a Single Member Operating Agreement
Thanks!
From: Jeff
State:Texas
Posted: 05/05/2008
Subject: LLC Operating agreement
Comment: In a Texas LLC, that does not have an operating agreement, is there a process for expelling a member or is the only option LLC dissolution? If dissolution, can dissolution be completed without 100% member consent?
From: Joe
State:Missouri
Posted: 04/29/2008
Subject: the Texas double negative
Comment: Thanks Craig. The double negative slipped by me.
From: Craig
State:Texas
Posted: 04/27/2008
Subject: Single member LLC in Texas
Comment: Just to clarify, the Texas Business Code has a double negative in that single member LLC management agreements "are not unenforceable", meaning that they are enforceable even if their is only one member.
From: Reba
State:Texas
Posted: 12/30/2007
Subject: Single Member LLC question
Comment: So does that mean yes or no?
Thanks
From: Patrick
State:Texas
Posted: 11/14/2007
Subject: TX: Single Member LLC
Comment: RE: Email from Malley in TX
TX BOC § 101.001. DEFINITIONS. In this title:
(1) "Company agreement" means any agreement, written
or oral, of the members concerning the affairs or the conduct of the
business of a limited liability company. A company agreement of a
limited liability company having only one member is not
unenforceable because only one person is a party to the company
agreement.
From: Mallely
State:Texas
Posted: 10/15/2007
Subject: Operating Agreement for Texas
Comment: Hi, thank you for the info on this site. Could you please tell if an operating agreement is mandatory for a single member LLC in the state of Texas?
Thanks,
Mallely
From: Jessica
State:Ohio
Posted: 09/26/2007
Subject: getting started
Comment: I just wanted to say that this information is a great place to get started. And I wanted to know if you know if Ohio demands an operating agreement for single member LLCs as you haven't reached it on your list yet.
Thanks
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The above is provided for informational purposes only and is NOT to be relied upon as professional advice. The information presented on this site comes without any warranty of correctness and, therefore, should not be relied upon. This service is not a substitute for the advice of a professional. No attorney client relationship is created through use of this site.
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