Oregon LLC Operating Agreement Template

In Oregon, 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?

An Oregon 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 Oregon, but instead remains private. It’s advisable to hire an attorney to ensure your operating agreement is thorough and legally binding.

What Should Your Oregon LLC’s Operating Agreement Include?

An Oregon LLC’s Operating Agreement should include the following elements to ensure a comprehensive and clear understanding of the company’s structure and operations:

1. Name and principal address of the LLC
2. Purpose of the LLC and its duration (if any)
3. The percentage of each member’s interests in the LLC
4. How profits and losses will be allocated to each member
5. 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
6. Each member’s capital contributions and their process for future contributions
7. Each member’s rights and responsibilities
8. The management structure and management roles of members
9. The voting rights of each member and the required majority for decision-making
10. Rules for meetings, including frequency, notice, quorum, and voting procedures
11. Process for admitting new members or removing existing members
12. Provisions for the transfer, sale, or assignment of a member’s interest, including right of first refusal
13. What happens when a member sells their interest, becomes disabled, or dies, and the procedures for handling such situations (e.g., buyout provisions, continuation of the LLC, etc.)
14. Methods for resolving disputes among members or between members and the LLC
15. The process for amending the Operating Agreement
16. Provisions for the dissolution of the LLC, including the distribution of assets and liabilities
17. Record-keeping requirements and procedures for maintaining and accessing LLC records
18. Any restrictions or covenants on members, such as non-competition or confidentiality agreements
19. Any other provisions specific to the particular LLC, such as industry regulations, licenses, or other legal requirements

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 Oregon 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.

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 Oregon, 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. 

Comments