Delaware LLC Operating Agreement
Your Delaware LLC Operating Agreement is a legally binding document that outlines specific operating procedures for your business, such as voting, member/manager responsibilities, distributing profits, and (should the time come) closing your LLC.
On this page, we’ll answer the biggest questions about Delaware LLC Operating Agreements, including:
- Does my Delaware LLC need an operating agreement?
- Why should I have an operating agreement for my Delaware LLC?
- What happens if I don’t have an operating agreement?
- Are Delaware LLC operating agreements public record?
- What should I include in my Delaware LLC operating agreement?
- I own a single member LLC. Do I need an operating agreement?
- Does my Delaware LLC operating agreement need to be notarized?
Need an operating agreement for your new Delaware LLC? When you hire us for Delaware LLC formation or registered agent service, you’ll get a FREE attorney-drafted operating agreement you can customize to fit your business’s needs.
Does my Delaware LLC need an operating agreement?
Technically, you are not required to have an operating agreement for your Delaware LLC. However, having a solid operating agreement is often necessary for establishing a business bank account, proving ownership, and maintaining your limited liability status.
Why should I have an operating agreement for my Delaware LLC?
Although the state does not require LLCs to have an operating agreement, it can be one of your most important business documents. A well-thought-out operating agreement can:
- Maintain your limited liability status: To reap the benefits of limited liability protection, you must establish your Delaware LLC as a separate entity from you (the business owner). An operating agreement is a great way to create that separation.
- Prove ownership of your business: One benefit of forming a Delaware LLC is that you’re not required to list member/manager information when filing your Certificate of Formation. However, this can also make proving you own your business harder. An operating agreement (that lists ownership information) can prove you’re the owner.
- Provide clarity for internal disputes or disagreements: Misunderstandings can sometimes be challenging to avoid. A strong operating agreement that clearly outlines company rules can help prevent misunderstandings from becoming full legal disputes.
What happens if I don’t have an operating agreement?
Without an operating agreement, your LLC will be solely governed by Delaware state laws. Unfortunately, these laws may not be ideal for your company. For example, DE Code § 18-402 states, “Unless otherwise provided in a limited liability company agreement, each member and manager has the authority to bind the limited liability company.” So, unless your operating agreement states otherwise, any member (or manager) of your LLC could enter into contracts and create legally binding obligations on behalf of your company.
An operating agreement allows you to create specific rules/procedures (within the boundary of state law) for your LLC. Essentially, your operating agreement ensures your company runs how you want it to run.
Are Delaware LLC operating agreements public records?
No. Your Delaware LLC operating agreement is an internal document–meaning you don’t need to file it with the Division of Corporations.
Per DE Code § 18-101, your operating agreement can be “written, oral, or implied.” However, because an operating agreement is legally binding, it’s best to have a written agreement–especially since oral or implied agreements likely won’t hold up well in court.
What should I include in my Delaware LLC operating agreement?
You can include anything (within state law) in your Delaware LLC operating agreement. However, most people will (at minimum) include the following:
- Member/manager information: Include member/manager names and specify each individual’s ownership percentage.
- Management structure: Determine if your LLC will be manager-managed or member-managed.
- Initial contributions: Specify each member’s initial contribution and establish (if you choose) consequences for anyone who does not meet future funding requirements.
- Ownership transfer: Outline how (and if) members can transfer their ownership to another individual.
- Voting rights: Define the voting process. Specifically, you may want to divide members into voting and non-voting groups. This will be especially helpful if you have passive investors.
Our attorney-drafted operating agreement includes all of the above, plus guidelines for compensation, profits and losses, distributions, bookkeeping, reports, dissolution, and much more. Get our operating agreement free with registered agent or LLC formation service.
I own a single-member LLC. Do I need an operating agreement?
Yes! Although it might seem odd to establish an agreement with yourself, even single-member LLCs can benefit from having a solid operating agreement. Why? There may be times when you need to prove ownership of your business and (more importantly) protect your limited liability status.
Does my Delaware LLC operating agreement need to be notarized?
No. Your Delaware LLC operating agreement is an internal document, meaning you are not required to have your agreement notarized.