Sample Operating Agreement for a Single Member LLC
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Sirkin & Associates
Sample Single-Member LLC Operating Agreement
A limited liability company is a form of business organization that combines aspects of the corporation and the partnership. An LLC may be managed by its owner(s) or by one or more managers who may or may not be owners.
A single-member LLC is a limited liability company with only one owner/member, or a company with two members who are spouses. The single member may also be another entity, such as a trust (including a living trust), a partnership, a corporation, or another LLC. All 50 U.S. states now allow limited liability companies to have only one member, but many other jurisdictions do not. A single-member LLC can be managed by a manager who is not the owner.
In general, an LLC is required to file annual tax returns even if it opts to be treated as a pass-through entity (meaning that it does not pay income tax). The only exception to the filing requirement applies to single-member LLCs, which can opt to be treated as “disregarded entities”. A disregarded entity is not required to file federal tax returns. In addition to saving time and money, disregarded entity tax treatment allows the owner to take tax benefits not generally available in connection with assets held by an LLC, such as mortgage interest deductions and capital gain exclusions on a home occupied as a personal residence by the LLC owner. Note, however, that many states (including California) require single-member LLCs to file state tax returns even though they are not required to file federal returns.
This single-member LLC Operating Agreement template can be used for limited liability companies formed in any U.S. state. It is simple, four pages in length, and is intended to provide the minimum content necessary to satisfy banks, other lenders, title companies, and governmental authorities in situations where the owner of the LLC needs to perform a function such as opening a bank account, acquiring or transferring property, signing a contract or other legal document, etc. This sample LLC Operating Agreement is not suitable for a limited liability company with more than one owner/member.