Louisiana LLC Operating Agreement Template

In Louisiana, 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 Louisiana 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 Louisiana, but instead remains private. However, LLCs in Louisiana that do write up an agreement must keep a copy at their registered office. It’s highly advisable to hire an attorney to ensure your operating agreement is thorough and legally binding.

What Should Your Louisiana LLC’s Operating Agreement Include?

Here are the key sections to include in your Operating Agreement:

1. Introduction:

• Name of the LLC
• Formation date and state (Louisiana)
• Purpose of the LLC
• Duration (perpetual or for a specific period)

2. Member Details:

• Names and addresses of all members
• Member capital contributions
• Ownership percentages
• Rights and responsibilities of each member

3. Management Structure:

• Indicate whether the LLC is member-managed or manager-managed
• Specify the roles and responsibilities of managers (if applicable)
• Decision-making process (voting rights, quorum requirements, etc.)
• 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 and Distributions:

• Detail each member’s initial capital contributions
• Procedure for making additional capital contributions
• Distribution of profits and losses among members (e.g., based on ownership percentages or a different allocation method)
• Timing and method of distributions

5. Membership Changes:

• Process for adding new members
• Process for transferring membership interests
• Withdrawal or resignation of a member
• Events triggering dissolution of a member’s interest (e.g., death, bankruptcy)

6. Meetings and Voting:

• Frequency and location of meetings
• Requirements for calling a special meeting
• Notice requirements for meetings
• Voting rights and procedures (e.g., one vote per member or based on ownership percentage)
• Quorum requirements for decision-making

7. Recordkeeping and Financials:

• Maintenance of financial records and books
• Fiscal year
• Annual financial reporting requirements
• Process for amending the Operating Agreement
• Tax treatment of the LLC (e.g., partnership taxation or electing to be taxed as a corporation)

8. Dissolution and Winding Up:

• Events triggering dissolution of the LLC
• Process for winding up the business (e.g., paying creditors, distributing remaining assets to members)
• Filing requirements with the Louisiana Secretary of State

9. Dispute Resolution:

• Procedure for resolving disputes among members (e.g., mediation, arbitration, or litigation)

10. Governing Law:

• Specify that Louisiana law governs the Operating Agreement and any disputes arising from it

11. Miscellaneous Provisions:

• Severability clause
• Entire agreement clause
• Indemnification and liability protection for members and managers

12. Signatures:

• Execution by all members, indicating their agreement to the terms

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 Louisiana 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 essential to consult an attorney experienced in LLC formation and Louisiana business law to ensure your Operating Agreement is legally sound and tailored to your specific 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. 

Conclusion 

Though not legally required in Louisiana, 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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