New Jersey LLC Operating Agreement Template

In New Jersey, 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 New Jersey 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 New Jersey state and your business. These documents are for your internal use and are not filed with any governing body.

Download FREE Operating Agreement Templates

Single Member Multi Member

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 New Jersey LLC’s Operating Agreement Include?

For your New Jersey LLC, your Operating Agreement should include, but not be limited to, the following aspects:

1. Percentage of each member’s interests in the LLC: Clearly specify the ownership percentage of each member. This should be based on their initial capital contributions or any other agreed-upon method.
2. Allocation of profits and losses: Detail how profits and losses will be distributed among the members. This could be in proportion to their ownership percentage or another predetermined method.
3. Member rights and responsibilities: Outline the rights and responsibilities of each member, including their authority to make decisions, bind the company, and contribute capital. 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. Management structure and roles: Specify whether your LLC will be member-managed or manager-managed. Clearly define the roles and responsibilities of members or managers in the day-to-day operations and decision-making processes.
5. Voting rights: Define the voting rights of each member, including whether voting will be based on their ownership percentage, one vote per member, or another method. Additionally, specify any supermajority or unanimous vote requirements for certain decisions.
6. Rules for meetings and voting: Establish rules for holding meetings, including regular and special meetings, as well as the notice requirements, quorum, and voting procedures.
7. Provisions for changes in membership: Describe the process for when a member sells their interest, becomes disabled, or dies. This should include details on how the remaining members can buy out the departing member’s interest and any restrictions on transferring interests to third parties.
8. Buy-sell provisions: Include provisions that outline the process for the valuation and sale of a member’s interest in the event of their death, disability, or departure from the company.
9. Dissolution and winding up: Define the conditions and procedures for dissolving the LLC, including the distribution of assets and the settlement of debts.
10. Amendments to the Operating Agreement: Specify the process for amending the Operating Agreement, including any required voting thresholds or approval processes.
11. Governing law: Indicate that the Operating Agreement is governed by New Jersey state law, and any disputes will be resolved under that jurisdiction.
12. Miscellaneous provisions: Include any additional clauses that may be relevant to your specific LLC, such as confidentiality, non-compete, or dispute resolution provisions.

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 New Jersey 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 important to ensure that your Operating Agreement is tailored to the needs of your LLC and is in compliance with New Jersey state law. You may want to consult with an attorney to review and help draft your Operating Agreement to protect your interests and those of your LLC’s members.

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 New Jersey, 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.