What Is a Tennessee LLC Operating Agreement?
A Tennessee LLC operating agreement is a legal document that defines internal rules for how your LLC will function. For example, it outlines important details like:
- Who has the final say on major decisions?
- What would each member’s role be?
- How much capital is each member contributing?
- How are profits split between members?
- What happens if someone wants to join or leave the LLC?
In Tennessee, this document is governed by TN Code § 48-206-101. Unlike the articles of organization, you do not need to file your operating agreement with the Tennessee Secretary of State. You can keep it with your business records so LLC members can access it at their convenience.
Planning on updating your LLC ownership? Read our comprehensive guide on how to add or remove a partner from an LLC.
Does Tennessee Require an Operating Agreement for an LLC?
No. Most Tennessee LLCs are not required to have an operating agreement. However, there’s an important distinction. LLCs that use a board-managed structure must adopt a written operating agreement (TN Code § 48-206-101(a)). For all other LLCs, creating this document is optional.
Even though it generally isn’t required, having a written operating agreement is strongly recommended for LLCs in Tennessee. If you do not have an operating agreement, your LLC will be governed by default state rules. These rules may differ from how you want to run your business.
Legal Requirements for LLC Operating Agreements in Tennessee
Here are certain legal requirements in Tennessee that shape how your LLC’s operating agreement works:
- Ownership and Contributions: Under TN Code § 48-206-101(a)(1) – (5), you should clearly outline ownership details in your operating agreement. This includes each member’s interests in the LLC, their contributions, and any future obligations related to funding the business.
- Management Structure: Your LLC can be member-managed, manager-managed, or board-managed (TN Code § 48-249-403). Your operating agreement should state which structure you are using.
- Voting: Your agreement should clearly outline how decisions are made and how profits and losses are shared among members. For example, you can decide whether each member gets one vote or votes based on ownership percentage (TN Code § 48-240-101).
- Fiduciary Duties: Members and managers must act in good faith and in the best interest of the business (TN Code § 48-240-102). These legal obligations of loyalty and care cannot be removed.
- Dissolution Provisions: LLCs may be dissolved under certain conditions outlined in TN Code § 48-245-101. You can include additional rules for closing the business and distributing assets.
All Tennessee LLCs must file an annual report with the Secretary of State to remain in good standing. This filing is separate from your operating agreement and includes updated business information. In Tennessee, the report is typically due by the first day of the fourth month after your fiscal year ends.
Tennessee LLC Operating Agreement Sample
Take a look at the sample Tennessee LLC operating agreement template below for reference. It shows how key terms such as member ownership and the distribution of profits are structured within the document.
When you’re ready, use Legal Templates’s step-by-step questionnaire to create your own agreement in minutes and download it in PDF and Word format.
