For corporations and business professionals seeking to establish a presence in The Natural State, forming a Limited Liability Company (LLC) can bean ...
Arkansas LLC Operating Agreement Template
Written by: Carolyn Young
Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on July 14, 2022
Updated on May 7, 2023
In Arkansas, your limited liability company (LLC) is not required to have an operating agreement in place. But it’s highly recommended, as an effective operating agreement can help avoid disputes and lawsuits that could threaten the stability of your LLC.
What is an LLC Operating Agreement?
An Arkansas LLC operating agreement is an important legal document that details who owns the business and provides essential information pertaining to member duties. An LLC operating agreement establishes the financial relationship between members and the basics of the working relationships between those members and the managers who oversee daily operations.
The operating agreement is not filed with the state, but instead remains private. It’s advisable to hire an attorney to ensure your operating agreement is thorough and legally binding.
We’ve provided two operating agreement templates for your use. One is for a single-member LLC if you are the sole member, and the other is for a multi-member LLC if your LLC has two or more members. The documents are customizable and should be adjusted for Arkansas state and your business. These documents are for your internal use and are not filed with any governing body.
Download FREE Operating Agreement Templates
Disclaimer: These documents may need to be adjusted based on your circumstances and may not cover all situations. Your document also may need to be adjusted over time as your business evolves. These documents should not be considered legal advice. You should have your version of the document reviewed by your attorney to make sure that all necessary provisions are included to fit your business situation.
What Should Your Arkansas LLC’s Operating Agreement Include?
The operating agreement should clearly define:
- Basic information: Include the LLC’s name, address, and the date of formation.
- Ownership structure: Detail the percentage of ownership for each member, as well as the initial capital contributions provided by each member.
- Management structure: Specify whether the LLC will be managed by its members or by appointed managers. Include the responsibilities, decision-making authority, and the process for appointing or removing managers, if applicable. If the LLC has a board of directors, the operating agreement will also include the role and responsibilities of the board members and how they are compensated.
- Voting rights: Outline the voting rights of members, including the required majority (e.g., simple majority or supermajority) for making decisions.
- Distribution of profits and losses: Define how the LLC’s profits and losses will be allocated among its members, typically in proportion to their ownership percentage.
- Meetings: Establish rules for holding regular and special meetings of the members or managers, including meeting notice requirements and quorum.
- Recordkeeping: Detail the recordkeeping requirements, including maintaining financial records, minutes of meetings, and other important documents.
- Admission of new members: Specify the process for adding new members, including any required approval, capital contributions, or other conditions.
- Withdrawal, dissociation, or expulsion of members: Set forth the process for members to voluntarily withdraw from the LLC, or for the LLC to expel a member under certain circumstances.
- Dissolution and winding up: Establish the process for dissolving the LLC, including the events that trigger dissolution, the distribution of assets, and any required notifications.
- Amendments: Define the procedure for amending the operating agreement, typically requiring a certain majority vote.
- Governing law: Specify that the operating agreement is governed by the laws of Arkansas.
- Miscellaneous provisions: Include any other clauses necessary to address the unique needs of your LLC, such as non-compete agreements, indemnificatib on, or dispute resolution mechanisms.
An LLC operating agreement provides legal and financial recourse for a number of situations. If conflicts arise between LLC owners pertaining to any of the above issues, the operating agreement will provide clarity.
The specific language of the operating agreement lays out exactly how such conflicts will be resolved, how the business is structured, the dynamics of operations, and more.
Though Arkansas has default rules on the books that address some of the issues that might arise between LLC members, your LLC operating agreement would override these default laws and give you greater control.
Remember that this list is not exhaustive and may vary depending on your specific LLC needs. It’s a good idea to consult with an attorney to ensure that your operating agreement complies with Arkansas law and covers all relevant aspects of your business
How Much Does an Operating Agreement Cost?
Creating an operating agreement is free if you just draw it up yourself. Alternatively, you can pay for guidance from an online business advisory like ZenBusiness.
This is an extremely important document, so it’s recommended that you hire a professional service or law firm. If you choose to use an attorney to help you create this document, the price will be around $500 for a single-member LLC and $2,500 for a multi-member LLC.
Who Needs my LLC Operating Agreement?
One of the key reasons to have an operating agreement in place is that it makes your LLC more appealing to financial backers. Banks are likely to request to see your operating agreement when you apply for a loan. If you seek funding from investors, they will also want to see your operating agreement.
Though not legally required in Arkansas, an operating agreement is a crucial document for LLC operations, ensuring your company is able to access adequate financing and settle any disputes. Keep in mind, you do not need to file your operating agreement with any state body. You simply need to take certain steps to ensure it’s legally binding and keep it in your records.
Arkansas LLC Operating Agreement Template
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