Nevada has long been a magnet for entrepreneurs and business owners seeking a favorable environment to launch their ventures. With itsbusiness-frien ...
Nevada 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.
Published on July 15, 2022
Updated on May 7, 2023
In Nevada, 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 Nevada 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 Nevada 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 Nevada LLC’s Operating Agreement Include?
A Nevada LLC’s Operating Agreement should be tailored to the specific needs of the company, but generally, it should include the following elements:
- Basic Information: This section should provide the LLC’s name, its purpose, principal place of business, and the duration of the company (if it’s not perpetual).
- Formation and Documentation: Include details about the Articles of Organization filed with the Nevada Secretary of State, as well as any other relevant formation documents.
- Ownership Structure: Clearly define the ownership interests of each member, including their capital contributions and percentage of ownership interest. 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.
- Management Structure: Specify whether the LLC will be managed by its members (member-managed) or by designated managers (manager-managed). Include the names and responsibilities of managers, if applicable.
- Voting Rights and Decision-Making: Detail the voting rights of each member and the process for making decisions within the company. This may include provisions for majority, supermajority, or unanimous votes.
- Allocation of Profits and Losses: Describe how the LLC’s profits and losses will be allocated among members, typically in proportion to their ownership interests.
- Distributions: Establish the procedure for distributing profits to members, including the timing and method of distributions.
- Record Keeping and Financial Reporting: Outline the record-keeping responsibilities and requirements for financial reporting, including accounting methods, fiscal year, and annual financial statements.
- Meetings: Specify the frequency and procedures for holding meetings, including regular and special meetings, notice requirements, and quorum rules.
- Admission of New Members: Detail the process for admitting new members, including approval requirements, capital contributions, and any other conditions for membership.
- Withdrawal or Transfer of Membership Interest: Set forth the procedures for a member to withdraw from the LLC or transfer their membership interest, including any restrictions and buyout provisions. An operating agreement should clearly define what happens when a member sells their interest, becomes disabled, or dies.
- Dissolution: Explain the circumstances under which the LLC may be dissolved, as well as the process for winding up its affairs and distributing its assets.
- Indemnification: Include provisions for indemnifying members and managers from liability in connection with their actions on behalf of the LLC, to the extent allowed by law.
- Dispute Resolution: Establish a process for resolving disputes among members, which may include mediation, arbitration, or litigation.
- Amendment Process: Specify the procedures for amending the Operating Agreement, including any required votes or approvals.
- Governing Law: Indicate that Nevada law will govern the interpretation and enforcement of the Operating Agreement.
- Miscellaneous Provisions: Include any additional provisions that may be relevant to the LLC, such as confidentiality requirements, non-compete agreements, or intellectual property rights.
- Execution: Have all members sign and date the Operating Agreement, acknowledging their agreement to its 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 Nevada 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.
Consulting with a business attorney can help ensure that your Operating Agreement is comprehensive, legally compliant, and tailored to your business’s unique requirements.
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 Nevada, 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.
Nevada LLC Operating Agreement Template
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