An operating agreement is a document that outlines the internal rules, structure, and management procedures for a limited liability company (LLC), helping to govern how the company operates and how members interact with one another.
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Last Updated: December 18, 2025
An operating agreement is a document that clearly outlines an LLC’s rules and structure. It’s one of the most important documents for an LLC. The operating agreement can detail:
Every LLC’s operating agreement will be different and can range in length depending on the detail it provides. The primary purpose is to have a set of rules as a guideline for the LLC’s operation. Whether an LLC’s operating agreement is one page long or 20, there are clear benefits to having a well-constructed operating agreement.
As an LLC scales and grows, an operating agreement will articulate the company’s business rules. Those rules can also dictate how the company will split its assets if it ever needs to dissolve.
Another operating agreement advantage is that it can be written to establish the rights and responsibilities of each member or manager of the LLC. In the event of a dispute, the operating agreement can help determine the appropriate resolution.
LLC terminology is different from the terminology used in other businesses, like corporations. An LLC can be “member-managed” or “manager-managed.” A member-managed LLC is operated by all members or owners. Meanwhile, a manager-managed LLC is run by designated managers who can either be LLC members or hired employees.
An operating agreement serves an important role in defining and limiting the authority of an LLC’s managers. It can also outline the compensation managers receive for their services.
Usually, a limited liability company isn’t required to draft an operating agreement; many states make that optional. There are a few states that require an operating agreement, such as California, Delaware, Maine, Missouri, and New York.
If an LLC owner opts out of drafting an operating agreement, the LLC will be governed by the state’s LLC-specific statutes regarding dissolution of the business or scenarios such as equity splits. In some states, relying on default LLC laws can create a disadvantage for many LLCs.
ZenBusiness offers a guide on how to create an operating agreement that walks users through a template for getting started on writing a new operating agreement. These templates aren’t the right fit for every business, but they can be a great match for the entrepreneur who wants to save money on attorney fees while avoiding default LLC laws.
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It can be overwhelming to keep track of all the documents associated with LLC formation. That’s where ZenBusiness comes in. They can help entrepreneurs start a brand-new LLC with their LLC formation services. ZenBusiness handles the red tape so entrepreneurs can focus on what they love: growing their new businesses.
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. For specific questions about any of these topics, seek the counsel of a licensed professional.
Written by ZenBusiness Editorial Team
The ZenBusiness Editorial Team has more than 20 years of combined small business publishing experience and has helped over 850,000 entrepreneurs launch and grow their companies. The team’s writers and business formation experts are dedicated to providing accurate, practical, and trustworthy guidance so business owners can make confident decisions.
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