Single-Member LLC Operating Agreement Template

A single-member LLC operating agreement outlines the purpose, finances, and operations of an LLC with one owner. This document helps establish limited liability — the separation between the business and the owner’s assets.

Since there is only one signatory, it’s recommended that the owner sign the operating agreement in the presence of a notary public to ensure it’s time-stamped.

By State

Table of Contents

• By State
• What Is a Single-member LLC?
• Do Single-Member LLCs Need an Operating Agreement?
• Setting Up a Single-Member LLC
• What should be included in a Single-Member LLC Operating Agreement?
• How to Write a Single-Member LLC Operating Agreement
• Single-Member LLC Operating Agreement  Sample
• Frequently Asked Questions

What Is a Single-member LLC?

A single-member LLC (SMLLC), also known as a sole-member LLC, is a limited liability company (LLC) with one owner (member). It protects its owner’s assets from the company’s debts and obligations as a separate entity.

A single-member LLC operating agreement can also be called a sole-member LLC operating agreement.

A single-member limited liability company benefits from tax classifications similar to those of a multi-member LLC. According to the Internal Revenue Service (IRS), it is classified as a disregarded entity, meaning it doesn’t file a tax return on behalf of the business.

The owner’s federal tax return records the business’s profits and losses. The earnings are subject to self-employment taxes using Schedule C in the same manner as a sole proprietorship.

Alternatively, a single-member operating agreement can be taxed as a corporation by filing an Entity Classification Election (Form 8832).

It’s important to note that all states charge an annual fee for limited liability companies. For example, any LLC doing business or organized in California must pay $800 annually.

Single-Member LLC vs. Sole Proprietorship

A sole proprietorship and a single-member LLC are both owned by one person.

However, unlike a limited liability company, a sole proprietorship is not legally separated from its owner. This means the owner is still liable for the business’s debts, losses, and legal obligations.

Do Single-Member LLCs Need an Operating Agreement?

Operating agreements are required for single-member limited liability companies registered in California, New York, Missouri, Maine, and Delaware.

While not needed for the remaining states, creating an operating agreement when establishing your SMLLC is highly advised.

Should You Create a Single-Member LLC Operating Agreement?

You may not need an agreement if you’re forming a limited liability company. However, it’s highly recommended that you create one for the following reasons:

• Prove separation: An operating agreement acts as evidence to courts that your limited liability company is a separate entity removed from your assets. This is important if you or your LLC are sued based on your LLC business and the lawsuit attempts to reach your assets.
• Define dissolution/succession: This allows you to outline how assets and liabilities should be distributed if the LLC must dissolve (although liabilities are always paid first) and appoint someone to manage the LLC in the event of your death or incapacitation.
• Increase credibility: Investors will evaluate your LLC operating agreement before doing business with your company. Banks will often require one to open a bank account.
• Determine your own rules: Without an operating agreement, your  LLC is subject to the rules governing LLCs in the state where its articles of organization are filed.

Setting Up a Single-Member LLC

The steps to creating a single-member operating agreement are as follows:

1. Name your LLC: You need to follow some basic naming conventions when naming your LLC and ensure that the name is unique. Some states allow you to check online if an LLC name is available.
2. Choose a registered agent: Appoint a registered agent for your LLC. They are responsible for receiving and filing legal documents. Your registered agent must reside in the same state as your LLC.
3. File articles of incorporation: To form an LLC, you must file your LLC’s articles of incorporation. You’ll need to pay a filing fee, which varies from state to state, and submit the documents to the Secretary of State’s office.
4. Draft a single-member LLC operating agreement: Although most states do not require an operating agreement, it is essential to LLC formation. It sets out how the limited liability company will operate.
5. Obtain an Employer Identification Number (EIN): You technically do not need an EIN. However, an EIN makes it easier to separate personal and business finances, and opening a business bank account for your LLC may be required. You can obtain an EIN online from the IRS.
6. Apply for business licenses: Depending on the state where your LLC will be formed and the cities where you will conduct business, you may need to apply for a business license before your company can begin operating.
7. Set up an LLC bank account: Open an LLC account to separate your assets from your business assets.

What should be included in a Single-Member LLC Operating Agreement?

There are several elements that a single-member LLC operating agreement must include:

• Date and location of incorporation: Include the date the operating agreement is being entered and the state where the LLC was formed.
• Company details and registered agent: Detail the name, place of business, purpose, and name and address of the registered agent.
• Management: The name of the owner. Single-member LLCs usually choose to be managed by the sole member, but not always. A non-member manager can also be appointed.
• Capital contributions: Outline any capital contributions you make to the business.
• Payment: How will the LLC compensate you?
• Dissolution and succession: What will happen to the business if you die or become incapacitated?
• Governing laws: Include the state in which the LLC was formed.
• Signatures: As the sole owner, sign the operating agreement.

How to Write a Single-Member LLC Operating Agreement

The content should describe your business’s purpose, operations, and finances.

Step 1 – State and Date

a) This is the state where the LLC was formed.

b) The date the agreement is entered into is as follows:

Step 2 – Introductory Provisions

Provision A

List the legal name under which you will operate and file taxes. This may or may not be your name for marketing or other purposes.

However, this should be your name so you can legally file the LLC in your state.

Be aware that states have specific requirements for how you name your LLC. This varies by state, so be sure to check with your Secretary of State or the equivalent business formation office in your state for the naming requirements of your LLC.

Provision B

List the primary location where business is conducted. This will be the physical address that you used when you filed to register the LLC in your state.

If you do not have a physical address for operations, this will be the address you listed when you pointed to register your LLC with your state.

The physical address may be the same as your registered agent address, which you must provide if you need to receive service or official documents on behalf of the company.

Provision C

List the state or states where the LLC is registered and operating.

Provision D

The registered agent is the designated individual or company physically located within the state that can receive service of process or other correspondence on behalf of the LLC.

A member in the state can be appointed as a registered agent for the LLC.

Include the full physical address of the registered agent, where service of process or other legal or official correspondence can be delivered or served upon the company. This cannot be a PO Box.

Provision E

This is the date when the LLC officially begins operations. This may or may not be the same date as the date of this operating agreement.

Provision F 

This is the timeframe that the LLC will follow to establish an entire year. Most businesses follow the calendar year, which runs from January 1 through December 31; however, you can choose a different time frame as long as it is a full year.

For example, your fiscal year can run from April 1 through March 31.

Step 3 – Membership Interests and Management

a) List the full legal names of the sole member of the LLC. In an LLC, a member has ownership and voting rights within the company. Also, include the complete physical address.

b) This is the number of units the LLC may issue its members. It is common for a single-member LLC to give one class of membership units—for example, 100 regular units to the sole member.

Step 6 – Capital Contributions

Outline capital contributions, including cash, property, and other assets you make to the business as the sole owner.

Step 7 – Payment

Describe how you will be compensated by the LLC, for example, by receiving a regular salary or periodic lump sum payments. Including this in your single-member LLC operating agreement demonstrates to tax agencies that the business is separate from you.

Step 8 – Dissolution & Succession

Provide a plan for your business management and assets if you die or become incapacitated. If you want to name a successor, use this section.

Step 9 – Governing Laws

a) This is the state in which the LLC was formed.

Step 10 – Signature

Sign the SMLLC operating agreement – since you’re the only one signing the document, it’s recommended that you mark it in the presence of a notary public.

Single-Member LLC Operating Agreement  Sample

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Frequently Asked Questions