The Complete LLC Operating Agreement Checklist (2025)

Your Complete Operating Agreement Checklist

Creating an LLC operating agreement involves a lot of moving parts. Miss a critical provision, and you could find yourself relying on state default rules that don't match your intentions. This comprehensive checklist ensures you cover every essential element.

Use this as a guide when creating or reviewing your operating agreement. Not every provision will apply to every LLC, but each one deserves consideration.

Section 1: Company Formation Basics

• LLC legal name — exactly as it appears on your articles of organization
• State of formation — where the LLC was organized
• Date of formation — when the articles of organization were filed
• Principal place of business — main office address
• Registered agent — name and address
• Business purpose — what the LLC does (usually broad)
• Duration — perpetual or for a fixed term
• Fiscal year — calendar year or alternative

Section 2: Members and Ownership

• Member list — full legal names and addresses of all members
• Ownership percentages — each member's share of the LLC
• Initial capital contributions — what each member contributed (cash, property, services)
• Valuation of non-cash contributions — agreed values for property and service contributions
• Capital accounts — how they're established and maintained
• Additional contribution requirements — rules for capital calls
• Consequences for missed contributions — dilution, loan treatment, buyout triggers

Section 3: Management Structure

• Management type — member-managed or manager-managed
• Manager identification — if manager-managed, who the managers are
• Manager appointment process — how managers are selected
• Manager removal process — how managers are replaced
• Manager authority — specific powers and limitations
• Manager compensation — salary, fees, or other compensation
• Officer positions — if applicable, titles, duties, and authority
• Fiduciary duties — duty of care and duty of loyalty defined

Section 4: Voting and Decision-Making

• Voting method — per capita, percentage-based, or class-based
• Individual authority — what the managing member can decide alone
• Majority vote items — decisions requiring more than 50%
• Supermajority items — decisions requiring 67% or 75%
• Unanimous consent items — decisions requiring all members
• Quorum requirements — minimum participation for a valid vote
• Meeting notice requirements — how much advance notice is required
• Regular meeting schedule — frequency and format
• Special meeting procedures — how to call unscheduled meetings
• Written consent procedures — actions that can be approved without a meeting
• Proxy voting rules — whether and how members can vote by proxy
• Deadlock provisions — tie-breaking mechanisms

Section 5: Financial Provisions

• Profit allocation method — how profits are divided among members
• Loss allocation method — how losses are divided
• Distribution frequency — monthly, quarterly, or annually
• Distribution authorization — who decides when distributions are made
• Tax distribution provisions — mandatory distributions to cover tax obligations
• Retained earnings policy — how much profit is kept in the business
• Reserve requirements — minimum cash reserves
• Special allocations — if applicable, with substantial economic effect compliance
• Guaranteed payments — payments to members for services rendered
• Expense reimbursement — which member expenses the LLC covers

Section 6: Tax Provisions

• Tax classification — partnership, S-corp, C-corp, or disregarded entity
• Tax matters partner/member — who handles tax filings and IRS communications
• Tax election authority — who can make tax elections
• Capital account tax basis tracking — information provided to members
• Section 754 election — whether the LLC will make this election upon transfers
• Section 704(c) allocation method — for contributed property

Section 7: Transfer Restrictions

• General transfer restrictions — what restrictions apply to membership transfers
• Right of first refusal — procedure and timeline
• Consent requirements — what vote is needed for outside transfers
• Permitted transfers — transfers allowed without consent (family, trusts)
• Tag-along rights — minority member protections
• Drag-along rights — majority member protections
• Valuation method — how transferred interests are priced
• Discounts — whether minority or marketability discounts apply
• Transfer documentation — what paperwork is required

Section 8: Buy-Sell Provisions

• Trigger events — death, disability, withdrawal, bankruptcy, expulsion
• Buyout type — cross-purchase, entity purchase, or hybrid
• Valuation method — fixed price, formula, appraisal
• Payment terms — lump sum, installments, down payment
• Funding mechanisms — life insurance, disability insurance, sinking fund
• Non-compete obligations — for departing members
• Transition period — time for knowledge transfer

Section 9: Dispute Resolution

• Internal discussion requirement — mandatory first step
• Mediation — required before adversarial proceedings
• Arbitration — rules, organization, and procedures
• Litigation — when court proceedings are appropriate
• Governing law — which state's law applies
• Forum selection — where disputes are resolved
• Jury waiver — if applicable
• Attorney fee allocation — who pays in disputes
• Confidentiality — keeping disputes private

Section 10: Member Exit Provisions

• Voluntary withdrawal — notice period, process, and consequences
• Involuntary removal — grounds and procedures for expelling a member
• Death provisions — buyout, inheritance, or continuation
• Disability provisions — definition and buyout procedures
• Bankruptcy provisions — what happens to the member's interest
• Divorce provisions — protecting the LLC from non-member spouses
• Retirement provisions — planned departures for long-term members

Section 11: Books, Records, and Reporting

• Record keeping obligations — what records the LLC must maintain
• Member inspection rights — how members access records
• Financial reporting — what reports are provided and how often
• Bank account management — who has signatory authority
• Accounting method — cash or accrual
• Independent audit — whether and when audits are required

Section 12: Dissolution

• Dissolution triggers — voluntary and involuntary
• Voting requirements — what vote is needed for voluntary dissolution
• Continuation rights — can remaining members continue after a triggering event
• Winding-up procedures — step-by-step process
• Asset distribution priority — creditors, loans, capital, profits
• Responsible party — who manages the winding-up process
• Final tax filing — who handles and when

Section 13: General Provisions

• Amendment procedures — how the agreement is modified
• Indemnification — who is covered and to what extent
• Insurance requirements — what coverage the LLC must maintain
• Non-compete/non-solicit — restrictions on member activities
• Confidentiality — protecting LLC information
• Intellectual property — ownership and licensing
• Entire agreement clause — supersedes prior agreements
• Severability — if one provision is invalid, the rest survives
• Notices — how formal notices are delivered
• Counterparts — allowing separate signature pages

Section 14: Execution

• Signature lines — for every member
• Date — when the agreement is effective
• Witness or notarization — if required by state law
• Exhibits — capital contribution schedules, property descriptions, etc.

Using This Checklist

This checklist is comprehensive, but not every provision applies to every LLC. A single-member LLC won't need transfer restrictions or dispute resolution between members. A small two-person service company won't need the same complexity as a multi-member real estate syndication.

Use this checklist as a starting point, and customize it based on your LLC's specific needs, your state's requirements, and the agreements you've reached with your co-members.

The goal isn't to create the longest possible document — it's to create one that anticipates the scenarios your LLC is most likely to face and provides clear answers when they arise.