5 Elements The Best LLC Operating Agreement Templates Include

There are several elements the best LLC operating agreement templates include. Many limited liability companies look for templates that establish rules and guidelines to run their business. Of course, the templates can also hold areas for internet startup ideas or other operations. Using these templates, companies can create contracts that explain employee job duties and rights within the company. As an LLC owner, you should familiarize yourself with the best elements operating agreement templates have to offer. This way, you can control which team members have authority over different aspects of your company. Read on to discover what elements the best LLC operating agreement templates include.

Ownership Percentages

First, you should use a template that includes ownership percentages for your LLC operating agreement. Typically, these templates suggest different ways to offer LLC members a fraction of ownership. Usually, they recommend to base the percentage off of the total funds they’ve invested. For example, someone who invests 80% of the total funds can own up to 80% of the company. Additionally, you might have employees who invest more money but have a lower performance rate. Here, employees who invest less money might contribute more to your company. In this case, you should look for a template that can offer your company’s stakeholders a more equal share. Surely, an ownership percentages section is an important element to consider when choosing an LLC operating agreement template.

Management Roles

Second, management roles is another element that operating agreements can include. Typically, the best templates provide an outline that can define your LLC management style, company roles and day-to-day business operations. This way, you’ll essentially have a blueprint for how your managerial structure is run. In addition, your template should address who will run your LLC. For example, many high quality templates have a place to input LLC members or hired managers to run your business. Plus, some templates offer a section for board of directors as well. Then, you can access and edit guidelines for how they make important business decisions. Of course, you should choose a template with a management roles section to create your operating agreement.

Distribution Of Profits

Next, the best LLC operating agreement templates include a distribution of profits element. Typically, the best templates include ways to define how much of your company’s profits must be distributed each year. Business owners and members still have to pay taxes on the full amount of distributed profits. You can use this section to address if your members will make enough to pay back what they owe each year. Remember that even profits plowed out of the business are treated as taxable income.  In addition, this operating franchise agreement section determines how often you’ll distribute profits. You should decide if you’ll share them regularly or if the owners are entitled to withdraw at will. Additionally, you should seek advice from a tax professional to achieve the results that you’re looking for. In short, you should use a template with a distribution of profits section to define how you’ll meet everyone’s financial needs.

Voting Rights

Also, most LLC operating agreement templates include voting rights. Most templates include voting rights elements, which are closely related to meeting provisions. These elements emphasize voting shares for each member. Oftentimes, this figure will be similar to member’s ownership interests. In other cases, a simple majority may be enough to finalize a vote. Whichever option you choose, you can include specific details right in your template. For more detailed agreements, you should also specify procedures regarding voting on operating agreement changes. Certainly, the best templates include voting rights in the operating agreement to run your LLC.


Furthermore, the best LLC operating agreement templates include a dissolution element. Make sure your template has space to define your business dissolution and termination process. Here, you can create a specific process to follow if the members decide to dissolve the company. In addition, the section defines how business affairs are shutdown. Typically, this means your members have to sell the company’s assets. Of course, your template should have a section to state how the sales proceeds will be paid out. Often, operating procedure suggests to pay out the outside creditors first, then the internal ones. Furthermore, you can split the remaining funds between the LLC members. Definitely, you should use an LLC operating agreement template with a dissolution section in case you close down the business.

There are several elements the best LLC operating agreement templates include. First, most templates include an ownership percentages section to state how the company is divided. Second, you should use a template with a management roles section to identify your managerial structure. Next, you’ll want to use a template that has a distribution of profits section to define how much profit is allocated each year. Then, you should consider a template with a voting rights section to define your voting procedure. Furthermore, the best templates include a dissolution element to help you choose a termination process if your business, such as as a tropical smoothie franchise, closes. These are the top elements the best LLC operating agreement templates include.  

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