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Kentucky 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.
Updated on May 7, 2023
Kentucky LLC Operating Agreement Template
In Kentucky, 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 Kentucky 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 Kentucky, 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 Kentucky 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 Kentucky LLC’s Operating Agreement Include?
Here are some key provisions you should consider including in a Kentucky LLC’s Operating Agreement:
- Company formation details: Include the LLC’s name, formation date, and registered office address in Kentucky.
- Purpose of the LLC: Describe the specific business purpose of the company and any limitations on its activities.
- Duration: Specify the duration of the LLC, whether it is perpetual or for a fixed term.
- Members and ownership: List the names and addresses of all members, along with their respective ownership percentages, initial capital contributions, and any additional contributions expected in the future.
- Management structure: Detail whether the LLC will be managed by its members or by one or more designated managers. If using managers, include their names, addresses, and duties. 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 and procedures: Outline the voting rights of members, which can be based on ownership percentages or other criteria. Explain the decision-making process and any voting thresholds for specific decisions.
- Distribution of profits and losses: Specify how profits and losses will be allocated among members, usually based on their ownership percentages.
- Meeting requirements: Detail any requirements for annual or special meetings, including notice, quorum, and procedures for calling and conducting meetings.
- Transfer of membership interests: Define the process and restrictions for transferring membership interests, including right of first refusal, buyout procedures, and any conditions for admitting new members.
- Dissolution and winding up: Describe the circumstances under which the LLC may be dissolved, the process for winding up the company’s affairs, and the distribution of any remaining assets to members.
- Amendments: Explain the procedure for amending the Operating Agreement, usually requiring a vote of a certain percentage of membership interests.
- Dispute resolution: Include a provision for resolving disputes among members, such as mediation, arbitration, or litigation.
- Governing law: Specify that Kentucky law will govern the Operating Agreement and any disputes arising from it.
- Miscellaneous provisions: Include any other provisions that are important for the specific business or industry, such as confidentiality, indemnification, or non-competition agreements.
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 Kentucky 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’s crucial to consult with an attorney to ensure that your Operating Agreement is comprehensive and compliant with Kentucky law. This list provides a general overview, but each LLC’s needs may vary based on its unique circumstances.
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 Kentucky, 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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