When it comes to starting a business in North Dakota, many entrepreneurs are turning to limited liability companies (LLCs) as their preferredbusines ...
North Dakota LLC Operating Agreement Template
Written by: Natalie Fell
Natalie is a business writer with experience in operations, HR, and training & development within the software, healthcare, and financial services sectors.
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
North Dakota LLC Operating Agreement Template
In North Dakota, 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 North Dakota 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 North Dakota 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 North Dakota LLC’s Operating Agreement Include?
For a North Dakota LLC, the Operating Agreement should include the following elements:
- Company name, formation date, and principal place of business: Clearly state the full legal name of the LLC, its formation date, and the address of its principal place of business.
- Business purpose: Describe the specific purpose(s) for which the LLC was formed and the activities it will engage in.
- Duration: Specify the duration of the LLC, whether it’s perpetual or has a fixed term.
- Percentage of each member’s interests in the LLC: Clearly define the ownership percentage of each member and how it was determined.
- Capital contributions: Detail the initial capital contributions made by each member and any additional contributions required in the future. 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.
- How profits and losses will be allocated to each member: Define the method for allocating profits and losses, which can be based on members’ capital accounts, ownership interests, or another agreed-upon method.
- Each member’s rights and responsibilities: Outline the rights and responsibilities of each member, such as their involvement in day-to-day operations, decision-making, and access to company records.
- The management structure and management roles of members: Specify whether the LLC will be member-managed or manager-managed, and define the roles and responsibilities of each manager or managing member.
- The voting rights of each member: Describe the voting rights of members, including the percentage of votes required for specific decisions and any supermajority or unanimity requirements.
- Rules for meetings and voting: Establish the procedures for conducting member meetings, including frequency, notice requirements, quorum, and voting procedures.
- Recordkeeping and financial reporting: Detail the requirements for maintaining company records, financial reporting, and tax filings.
- Admission of new members: Define the process for admitting new members, including any necessary approvals and capital contribution requirements.
- What happens when a member sells their interest, becomes disabled, or dies: Specify the procedures for handling a member’s departure, including buyout provisions, rights of first refusal, and valuation methods.
- Dissolution and winding up: Outline the process for dissolving the LLC and distributing its assets upon termination.
- Amendments to the Operating Agreement: Describe the process for amending the Operating Agreement, including the voting requirements and notice procedures.
- Dispute resolution: Specify the methods for resolving disputes among members, such as mediation or arbitration.
- Governing law: State that the Operating Agreement will be governed by and construed in accordance with the laws of North Dakota.
- Signatures: Include a space for each member to sign and date the Operating Agreement.
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 North Dakota 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.
While this list covers the essential elements of a North Dakota LLC’s Operating Agreement, it is always advisable to consult with an attorney when drafting such a document to ensure that it is legally sound and tailored to the specific needs of your business.
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 North Dakota, 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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