If you’re launching an LLC, there’s one document you can’t afford to overlook: the LLC Operating Agreement.
To begin with, this internal document outlines how your business will function, who owns what, how decisions are made, and what happens if things go wrong. However, many entrepreneurs (especially international founders) start operating without one, exposing themselves to unnecessary risks.
In this article, we explain why having an operating agreement in place before you open a bank account or bring on partners is critical to your business.
What Is an LLC Operating Agreement?
An LLC Operating Agreement is a legal document that defines the ownership structure and internal rules of your limited liability company. Although it’s not usually filed with the state, it still carries legal weight if disputes arise. In other words, it’s enforceable even behind the scenes.
Think of it as your company’s playbook. For example, it sets the rules for management, decision-making, member rights, profit sharing, and what happens if a partner leaves. Most importantly, it creates clarity before problems arise.
Even if you’re the sole owner, having a written agreement strengthens your LLC’s liability protection. Moreover, it is often required by banks when opening a business account or applying for credit.
Why You Need One Before Doing Business
Operating without a written agreement leaves your business vulnerable to state default laws. These laws may:
Require equal profit sharing, regardless of contributions
Demand unanimous consent for key decisions
Trigger automatic dissolution if a member leaves or dies
By contrast, a signed agreement gives you control over:
Voting rights and percentages
Profit distribution rules
Exit strategies and member buyouts
Banking authority and external representation
Most banks and lenders also require a signed operating agreement and a banking resolution to open business accounts.
Sample Operating Agreement for LLC: What Should It Include?
Every LLC is different, but a strong operating agreement usually includes these core clauses:
1. Formation and Members
First, the agreement should lay the foundation by covering the basics:
Business name and purpose
Registered agent and principal address
Member names and ownership percentages
This section formally establishes the company and documents who is involved from the beginning.
2. Management and Voting
Next, the agreement should clarify how decisions are made and who is authorized to make them:
Whether the LLC is member-managed or manager-managed
Who can make decisions and how votes are weighted
Procedures for major decisions (e.g., adding new members)
In other words, this section prevents future power struggles by setting clear decision-making protocols.
3. Capital Contributions
In addition, it’s crucial to spell out who is contributing what and when:
Initial investments (cash, property, services)
Future contribution obligations
This ensures all members understand their financial responsibilities upfront.
4. Profit and Loss Allocation
Equally important, the agreement should define how earnings are divided:
How profits are split
Distribution schedule
This section eliminates confusion around payouts and expectations.
5. Transfers and Buyouts
Eventually, one or more members may want to leave or transfer their interest. This clause should detail:
Rules for selling or transferring ownership
Valuation method for member exit
By including this, you reduce the chances of conflict during member exits.
6. Dispute Resolution
Unfortunately, not all disagreements can be avoided. This section should guide how to resolve disputes:
Mediation or arbitration requirements
Attorney fee clauses
As a result, you can reduce the cost and time of internal conflicts.
7. Dissolution and Winding Up
Finally, the agreement must explain what happens if the business ends:
Events that trigger dissolution
How assets are distributed upon closure
Having this in writing helps members wrap up operations smoothly if necessary.
State-Specific Tips: Florida, Texas, California
Depending on where your LLC is formed, the role and necessity of an operating agreement can vary.
While most states don’t require filing the document, some expect it as part of compliance, and others mandate it outright. Below, we highlight how Florida, Texas, and California treat LLC operating agreements.
Florida LLC Operating Agreement
To begin with, Florida does not legally require an operating agreement.
Not legally required, but highly recommended
Validates member ownership (not listed in Articles of Organization)
Reinforces limited liability status
However, drafting one is strongly encouraged to protect the business and clarify ownership, especially for single-member LLCs.
Operating Agreement LLC Texas
Similarly, Texas doesn’t mandate an operating agreement. However, operating without one means default state rules will apply.
Not required by law, but absence means default rules apply
Texas law defaults to profit-sharing by capital contribution
- Unwritten terms often lead to disputes or unwanted outcomes
In short, having a written agreement gives members control and reduces future conflict.
LLC Operating Agreement California
In contrast, California has stricter rules.
Required by law (even for single-member LLCs)
Must outline management structure and financial arrangements
- Helps stay compliant with California’s strict LLC laws and fees
As a result, LLCs in California should adopt an operating agreement as early as possible to avoid legal exposure.
Operating Agreement/Banking Resolution example: A Must for Accounts
Opening a business bank account without an operating agreement is often impossible. Banks typically require:
Signed operating agreement
- Banking resolution authorizing who can manage the account
This ensures clarity on who can:
Sign checks
Access funds
- Make financial decisions on behalf of the LLC
Having these documents ready speeds up onboarding and prevents banking delays. No operating agreement, no business bank account. It’s that simple.
Real Risks of Operating Without One
Without an operating agreement, you risk:
Disputes between members
Legal exposure (especially for single-member LLCs)
Banking and investor rejections
IRS penalties for non-compliance (in foreign-owned LLCs)
For international founders, it’s even more important. Banks often scrutinize foreign ownership and require clarity on:
Remote management
Capital contributions from abroad
Withholding and distribution terms
A customized operating agreement protects your structure and builds long-term credibility. The cost of not having an agreement? Delays, denials, disputes, and diminished protection.
Protect Your LLC from Day One
In conclusion, whether you’re launching your LLC in Florida, Texas, California, or any other state, the LLC operating agreement is not optional. Instead, it’s your internal safeguard against risk, misalignment, and legal chaos.
Therefore, take the time to draft it right, even if you’re a single owner.
Need Help Drafting Your LLC Operating Agreement?
Whether you’re forming your first LLC or restructuring an existing one, having a solid operating agreement is key to protecting your business.
At Loigica, we work with both U.S.-based and international entrepreneurs to create legally sound foundations for their companies. Specifically, we help you:
Structure your LLC to ensure compliance with state and federal regulations
Draft a customized operating agreement tailored to your members, management style, and business goals
Prepare supporting documents like banking resolutions and internal governance tools to streamline operations
Don’t leave your business structure to chance.
Contact us today for a strategy session and start your LLC with the clarity, confidence, and legal protection it deserves.
