Idaho LLC Operating Agreement Template

In Idaho, 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 Idaho 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 Idaho, but instead remains private. It’s advisable to hire an attorney to ensure your operating agreement is thorough and legally binding.

What Should Your Idaho LLC’s Operating Agreement Include?

The operating agreement should clearly define:

1. Purpose: The purpose of the LLC, as stated in accordance with the Idaho Limited Liability Company Act.
2. Members: The names and capital contributions of the members of the LLC, and the percentage of each member’s interests in the LLC. It should also include the voting rights of each member.
3. Management: A description of the management structure of the LLC, including the rights and responsibilities of the members and the process for holding meetings and taking action by written consent. 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. 
4. Capital Contributions: The terms and conditions for making capital contributions to the LLC, as well as any restrictions on transferring interests in the LLC.
5. Distributions: The method for distributing profits and losses among the members of the LLC.
6. Dissolution: The process for dissolving the LLC, including the procedure for winding up the affairs of the LLC and distributing its assets.
7. Amendment: The process for amending the operating agreement, including the requirements for gaining the approval of the members. Furthermore, operating agreement should clearly define what happens when a member sells their interest, becomes disabled, or dies.
8. Governing Law: A statement that the operating agreement will be governed by and construed in accordance with the laws of the State of Idaho.
9. Counterparts: A provision allowing the operating agreement to be executed in counterparts, making it easier for multiple members to sign the agreement remotely.

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 Idaho 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. The specific content of an operating agreement will depend on the unique circumstances of the LLC. Additionally, it is recommended to consult with a qualified attorney in Idaho to ensure that the operating agreement complies with all applicable laws and regulations.

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. 

Conclusion 

Though not legally required in Idaho, 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. 

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