What is an Operating Agreement for an LLC?

An LLC’s Operating Agreement is a legal document that establishes the rights and responsibilities of each LLC member and provides details about the LLC’s internal management, including how decisions are made, when meetings are held, how new members are admitted and more. Certain financial and administrative aspects of an LLC are defined in the Operating Agreement, including the LLC’s accounting methods, fiscal year, annual report details and more. The Operating Agreement may also specify who can sign contracts on behalf of the company and methods used to resolve disputes. The Operating Agreement can be thought of as acting like the Bylaws and Organizational Resolutions of a corporation (and the Certificate of Incorporation with respect to establishing the capital structure of the LLC). Unlike the corollary documents for a corporation, for which standard forms are generally available, Operating Agreements may require much more customization. Unlike the Certificate of Incorporation for a corporation, an LLC’s Operating Agreement is not publicly filed.