What an operating agreement is
An operating agreement is the agreement among the members (owners) of an LLC about how the company runs. State law supplies default rules, and the operating agreement replaces most of them with rules you choose. It covers ownership percentages, management, voting, profit distributions, adding or removing members and what happens if the LLC closes.
The name varies. Texas calls it a "company agreement." Delaware calls it a "limited liability company agreement." Most other states, including Wyoming and Florida, say "operating agreement." They do the same job.
The agreement is separate from the document you file to form the LLC. The formation filing (Articles of Organization or Certificate of Formation) is public and short. The operating agreement is private and much more detailed.
Do WY, NM, DE, FL and TX require an operating agreement?
None of these five states asks you to file an operating agreement, and none makes a written agreement a condition of forming the LLC. What differs is how each state's LLC law defines the agreement.
| State | How the law defines it | Filed with the state? |
|---|---|---|
| Wyoming | "Whether oral, in a record, implied or in any combination," of all the members "including a sole member" (W.S. 17-29-102(a)(xiv)) | No |
| New Mexico | "A written agreement providing for the conduct of the business and affairs of a limited liability company" (NMSA 53-19-2(O)) | No |
| Delaware | Any agreement "written, oral or implied" of the member or members (6 Del. C. § 18-101) | No |
| Florida | An agreement that "may be oral, implied, in a record, or in any combination," including of "a sole member" (Fla. Stat. 605.0102(45)) | No |
| Texas | "Any agreement, written, implied, or oral, of the members" (Tex. Bus. Orgs. Code 101.001(1)) | No |
So in four of the five states an unwritten understanding can technically count as the agreement, and New Mexico's definition only recognizes a written one. In practice an oral or implied agreement is close to useless: nobody outside the company can see it, and members can remember it differently. A signed written agreement is the version banks, payment providers and courts can read.
The formation filings in these states ask for very little. Delaware's certificate needs only the name, registered office and registered agent. Wyoming and Florida do not require member names on the public filing. Texas lists the initial managers, or the members if there are no managers. The operating agreement is where ownership is actually recorded. See our state pages for Wyoming, New Mexico, Delaware, Florida and Texas.
Single-member and multi-member agreements
Single-member LLCs need an operating agreement too. It is shorter, but it still matters. Delaware law says an agreement of a one-member LLC "shall not be unenforceable by reason of there being only 1 person" who is a party to it, and the Wyoming and Florida definitions expressly include a sole member.
What a single-member agreement focuses on
- Confirms that you own 100% of the LLC, which matters when you are the only person a bank can check.
- Names who manages the LLC and who can sign contracts and open accounts.
- Keeps business and personal funds separate, which supports the limited liability you formed the LLC for.
- Says what happens if you die or become unable to act, such as a successor or a named person to wind up the business.
- Records how the LLC is taxed. A single-member LLC owned by a non-resident is normally a disregarded entity, which brings the annual Form 5472 filing. The agreement does not change the tax classification. That is an IRS election.
What a multi-member agreement adds
- Each member's capital contribution and ownership percentage.
- How profits and losses are allocated and when cash is distributed.
- Voting: which decisions need a simple majority and which need everyone.
- Transfer restrictions, rights of first refusal and what happens when a member wants to leave.
- Buy-sell terms for death, disability, divorce or deadlock, with a method to value the interest.
- Dispute resolution, such as mediation or arbitration and which state's courts apply.
A multi-member LLC is usually taxed as a partnership, with different federal filings from a single-member LLC. Tax allocation clauses in a multi-member agreement should be written or reviewed by a licensed attorney or CPA, not copied from a template.
Why banks and payment providers ask for it
Banks and payment providers must know who owns and controls the businesses they serve. Your state filing often does not show owners, so the operating agreement is the document that ties you to the LLC. Mercury, for example, asks for ID from "any owner with at least 25% ownership" and "at least one person with operating control," according to its document checklist. When a reviewer needs to confirm those people, the agreement is the natural evidence.
The published lists we checked for Mercury and Relay center on the formation document, EIN confirmation and ID. Reviewers can still ask for more, and Mercury says eligibility "is determined following a full review of your application." An operating agreement that matches your formation documents and your application avoids delays. Our guide to a US bank account for your LLC covers the full document list, and our payment account setup service helps you prepare a consistent application.
Other people who commonly ask for the agreement include investors, landlords, marketplaces, accountants preparing your returns, and a buyer if you sell the business.
Key clauses checklist
A workable operating agreement usually covers the following points. Leave out what does not apply, but think through each one.
- Formation details: LLC name, state, filing date, registered agent, principal office and purpose.
- Members and ownership: names, addresses, contributions and percentage interests, often in a schedule you can update.
- Management: member-managed or manager-managed, and the authority of managers and officers.
- Signing authority: who can open bank accounts, sign contracts, borrow and hire.
- Voting and meetings: thresholds for ordinary and major decisions, written consent without a meeting.
- Capital: further contributions, loans from members and what happens if someone does not pay in.
- Profits, losses and distributions: allocation method and timing.
- Tax matters: tax classification, who prepares returns and, for partnerships, the partnership representative.
- Books and records: where records are kept, accounting year and member access rights.
- Transfers: restrictions, consent requirements and rights of first refusal.
- Admission and exit: how new members join, withdrawal, expulsion and buyouts.
- Indemnification and liability: protection for members and managers acting in good faith.
- Dissolution: events that end the LLC and how assets are distributed.
- Amendment: who must approve changes and in what form.
- Governing law and disputes.
How to amend an operating agreement
Follow the amendment clause in your agreement. If it has none, state default rules apply, and they often require every member to agree. In Delaware, if the agreement "does not provide for the manner in which it may be amended," it may be amended "with the approval of all of the members" (6 Del. C. § 18-302(f)). Florida's default rule says the operating agreement and articles "may be amended only with the affirmative vote or consent of all members" (Fla. Stat. 605.04073).
- Check the amendment clause and the vote it requires.
- Draft a written amendment, or an amended and restated agreement for larger changes.
- Have the required members sign and date it. Record the decision in a written consent.
- Update the ownership schedule and your internal records.
- Check whether the state record also needs changing. A new LLC name, a new registered agent or, in Texas, a change to the governing persons listed on the certificate may need a separate state filing.
- Tell your bank and payment providers about ownership or signer changes, and update IRS records where needed, such as a change of responsible party for the EIN.
Templates: use with care
Free templates are fine as a starting point for a simple single-member LLC, but they cause problems when copied without checking. Common faults:
- Written for a different state, citing the wrong statute or using terms that do not match your formation filing.
- Member-managed wording for an LLC filed as manager-managed, or the reverse.
- Partnership tax allocation language in a single-member agreement, or none in a multi-member one.
- Names, addresses and dates that do not match your passport, EIN letter and formation document. Mismatches are a frequent reason for bank queries.
- No buy-sell or deadlock clause between co-founders, which is where most disputes start.
This page explains general rules. It is not legal advice. For multi-member LLCs, outside investors, or unusual profit splits, ask a licensed attorney in your LLC's state to draft or review the agreement.
How we help
Our non-resident US starter bundle includes an operating agreement prepared for your LLC's state, member structure and management type, alongside formation, EIN, registered agent for the first year and the first Form 5472. We check that the names and details match your formation filing and passport, so the documents you give a bank tell one consistent story. This is a document preparation service, not legal advice. For complex multi-member terms we suggest a licensed attorney, and we are happy to work with the agreement they draft.
Sources
- Wyoming Statutes: 17-29-102 Definitions (statute text via Justia)
- New Mexico Statutes: 53-19-2 Definitions (statute text via Justia)
- Delaware Code: Title 6, Chapter 18, Subchapter I (§ 18-101)
- Delaware Code: Title 6, Chapter 18, Subchapter III (§ 18-302)
- Florida Statutes: 605.0102 Definitions
- Florida Statutes: 605.04073 Voting rights of members and managers
- Texas Business Organizations Code: 101.001 Definitions (statute text via Justia)
- Mercury: Gathering your documents
- Mercury: Eligibility and requirements for opening a Mercury account
Fees, deadlines and rules on this page were last checked on 27 September 2026.