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Hawaii LLC Operating Agreement Template
Written by: Coralee Bechteler
Coralee is a business writer with experience in administrative services, education, and software testing.
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 Hawaii, 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?
A Hawaii 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 of Hawaii, 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 Hawaii 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 Hawaii LLC’s Operating Agreement Include?
The operating agreement should clearly define:
- Date of agreement
- Names of the LLC members
- Name of the LLC and its principal place of business
- Statement of the LLC’s formation under Hawaii state law
- Effective date of the LLC’s formation
- The LLC’s primary purpose or business activities
- Definition of membership units or ownership interests
- Names and addresses of the LLC members
- Contributions made by each member (financial or otherwise)
- Provisions for admitting new members
- Procedures for transferring or assigning membership interests
- Guidelines for member meetings and voting rights
- Management and Decision-Making:
- Designation of management structure (member-managed or manager-managed)
- Duties and responsibilities of managers (if applicable)
- Decision-making process (voting rules, quorum requirements, etc.)
- Appointment and removal of 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
- Profits, Losses, and Distributions:
- Allocation of profits and losses among members
- Distribution of profits and losses
- Distribution waterfall or priority of distributions
- Capital Contributions and Capital Accounts:
- Initial capital contributions of members
- Procedures for additional capital contributions
- Maintenance of capital accounts for each member
- Meetings and Voting:
- Guidelines for member meetings (frequency, notice requirements, etc.)
- Voting procedures for major decisions
- Supermajority requirements (if applicable)
- Books and Records:
- Record-keeping requirements
- Access to financial and other records by members
- Financial reporting obligations
- Dissolution and Termination:
- Circumstances under which the LLC may be dissolved
- Liquidation and distribution of assets upon dissolution
- Buyout provisions in case of member withdrawal or dissociation
- Dispute Resolution:
- Mechanisms for resolving disputes among members (mediation, arbitration, etc.)
- Choice of law and jurisdiction
- Procedures for amending the operating agreement
- Consent requirements for amendments
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 Hawaii 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, this breakdown provides a general overview, and you should consult with an attorney to ensure compliance with Hawaii state laws and tailor the operating agreement to your specific business needs.
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 Hawaii, 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.
Hawaii LLC Operating Agreement Template
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