Delaware has long been known as the go-to destination for entrepreneurs looking to establish their businesses in a pro-business environment. The ...
Delaware 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.
Updated on May 7, 2023
Delaware LLC Operating Agreement Template
In Delaware, your limited liability company (LLC) is legally required to have an operating agreement in place. An effective operating agreement can also help avoid disputes and lawsuits that could threaten the stability of your LLC.
What is an LLC Operating Agreement?
A Delaware 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 Delaware 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 Delaware LLC’s Operating Agreement Include?
The operating agreement should clearly define:
- Basic information: Include the name of the LLC, the principal office address, the name and address of the registered agent, and the formation date.
- Purpose of the LLC: Clearly state the purpose of the LLC, describing the nature of its business activities and objectives.
- Duration: Specify the duration of the LLC, whether it is perpetual or for a fixed term.
- Member details: List the names, addresses, and capital contributions of each member. Indicate the ownership percentage of each member based on their capital contributions.
- Management structure: Define whether the LLC will be managed by its members or by one or more appointed managers. If managers are appointed, specify their roles, responsibilities, and decision-making authority. 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: Outline voting rights for members or managers, including voting thresholds for routine and major decisions.
- Distribution of profits and losses: Describe how profits and losses will be allocated among the members, typically in proportion to their ownership percentages.
- Capital contributions and additional capital: Define the process for making additional capital contributions and the consequences of not meeting capital contribution requirements.
- Meetings: Establish procedures for holding regular and special meetings, including notice requirements, quorum, and voting procedures.
- Record-keeping: Specify the records the LLC must maintain and the members’ rights to access those records.
- Buyout and transfer of membership interest: Outline the process and conditions for members to sell, transfer, or buy out their membership interests, including rights of first refusal and valuation methods.
- Dissolution and winding up: Detail the circumstances under which the LLC may be dissolved, as well as the process for winding up its affairs, including the distribution of assets and liabilities.
- Amendments: Establish a process for amending the operating agreement and specify any voting requirements for making changes.
- Dispute resolution: Include a dispute resolution clause outlining how conflicts among members or between members and the LLC will be resolved, such as mediation or arbitration.
- Governing law: Indicate that Delaware law governs the operating agreement and the LLC.
- Miscellaneous provisions: Add any other relevant provisions, such as indemnification, confidentiality, or non-compete clauses.
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 Delaware 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. It is recommended to consult with an attorney when drafting an LLC Operating Agreement to ensure that all legal requirements are met and the document accurately reflects the members’ intentions.
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.
An operating agreement is legally required in Delaware, and 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.
How to Start an LLC in Delaware
Published on March 2, 2022
Member-Managed vs. Manager-Managed LLCs
Published on January 10, 2022
When starting a business, there are many things to consider. If you’ve made the choice to form a limited liability company (LLC) you’ll need tod ...
How to Start a Business in Delaware
Published on August 24, 2021
The First State may be small, but it’s a giant in business terms. Business-friendly tax and legal policies have prompted entrepreneurs from across ...