What Is an Operating Agreement? Does Your LLC Need One?

What is an Operating Agreement?

An Operating Agreement is an internal document recording how the LLC runs: who owns what percentage, who manages it, how profits are split, and what happens when a member leaves or the company is dissolved.

Is it mandatory?

Many states don't require one and don't ask you to file it with the state. In practice, though, banks and payment platforms usually want to see an Operating Agreement when opening an account for an LLC. For multi-member LLCs it is also the key reference for settling disagreements later.

Why should a single-member LLC still have one?

• It shows the LLC is a separate legal entity, helping preserve limited-liability protection.
• You have it ready when a bank or partner asks.
• It records clearly who can make decisions and sign for the company.

The basic contents

• LLC details: name, state, address, Registered Agent.
• List of members, ownership percentages and capital contributions.
• Management structure: member-managed or run by an appointed manager.
• How profits, losses and distributions are shared.
• Conditions for transferring ownership.
• The dissolution process.

When to update it

Whenever members, ownership percentages or management change, or when you bring in an investor. Keep a copy signed by all members, stored with the state's paperwork.

You can get USBizViet's free bilingual template to use as a reference and adapt to your situation.

This article is general information, not legal or tax advice. Rules and fees change by state and over time — check the official state/IRS pages and consult a professional before you decide.