There are books written addressing how to draft LLC Operating Agreements. There are also numerous checklists that you can find online to help ensure you don’t miss considering anything. I strongly recommend, no I insist that you use aids (books, checklists, etc.) even templates from within your firm, but you must not copy things verbatim. Your client has hired you to draft a customized document that will govern their business. No two operating agreements should be exactly the same. Writing an operating agreement for a father-son landscaping business will look different than for a 17-member marketing consulting firm.
Where can you find good LLC agreements? (Hint, NOT free ones on certain websites…) The ABA and local CLE programs/materials have them. Westlaw and Lexis have sections with practical articles and forms that can be helpful. I also like searching the EDGAR system at sec.gov. There are many operating agreements to be found on the SEC website because the LLC is a favorite entity structure for companies doing joint ventures. Joint venture operating agreements can be very complex. Here is an operating agreement for your perusal. 📖 Read the capital contributions section. For those of you who have studied special allocations and IRC section 704, you will be interested to see the language pertaining to special allocations.
It would be terrific if courts would include the governing LLC Operating Agreement in their opinions. It would help us have more samples to look at but more importantly since “LLC decisions are largely driven by the operating agreement, … it would be helpful for all of us trying to learn from the case to have the full context.” Dean Joshua P. Fershee’s blog post here.
📖 Read this incredibly helpful article including the 20 ways to screw up an LLC here.
Here is a sample SMLLC operating agreement which, as you can see, is much simpler.