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Utah 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.
Published on July 16, 2022
Updated on May 7, 2023
In Utah, 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 Utah 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 Utah, 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 Utah 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 Utah LLC’s Operating Agreement Include?
The operating agreement should clearly define:
- Name and purpose of the LLC: Clearly state the name of the LLC, and the primary purpose for which it is being formed.
- Duration of the LLC: Specify the intended duration of the LLC, whether it is perpetual or for a fixed term.
- Registered agent and office: Identify the registered agent and the address of the registered office in Utah.
- Member information: Provide the names, addresses, and contact information of each member.
- The percentage of each member’s interests in the LLC: Clearly define the ownership percentage and interest of each member.
- Capital contributions: Detail the initial and any additional capital contributions each member is responsible for making.
- How profits and losses will be allocated to each member: Specify the method of distribution for profits and losses, whether it is proportionate to ownership interest or another agreed-upon method.
- Each member’s rights and responsibilities: Outline each member’s rights, such as voting rights and inspection rights, as well as their responsibilities, including duties to the LLC and other members.
- The management structure and management roles of members: Describe whether the LLC will be member-managed or manager-managed, and identify the roles and responsibilities of those in management positions.
- The voting rights of each member: Define the voting rights of each member, including what issues require a vote and the necessary percentage for decisions to be made.
- Rules for meetings and voting: Establish procedures for conducting meetings, including how often they will be held, the required notice, and quorum and voting rules.
- What happens when a member sells their interest, becomes disabled, or dies: Detail the process for handling the transfer or buyout of a member’s interest and the consequences of a member’s death, disability, or resignation.
- Admission of new members: Define the procedure for admitting new members to the LLC and any associated requirements, such as capital contributions or approval by existing members.
- Dissolution and winding up: Establish the conditions and procedures for dissolving the LLC, including the distribution of assets and settling of liabilities.
- Recordkeeping and financial reporting: Specify the requirements for maintaining records and financial statements, as well as how they will be made available to members.
- Amendments to the Operating Agreement: Detail the process for amending the Operating Agreement, including any required member approval.
- Governing law and dispute resolution: Indicate the governing law for the Operating Agreement, and establish procedures for resolving disputes between members, such as mediation or arbitration.
- Indemnification and limitation of liability: Include provisions that indemnify members or managers from personal liability and limit their liability for actions taken on behalf of the LLC.
- Confidentiality and non-compete provisions: If applicable, outline any agreements between members regarding confidentiality of business information and non-compete clauses.
- Tax and regulatory compliance: Address any specific tax treatment for the LLC, such as whether it will be taxed as a partnership or corporation, and ensure compliance with relevant Utah and federal regulations.
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 Utah 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.
Remember, it’s crucial to consult with an attorney or other legal professional when drafting an Operating Agreement to ensure compliance with Utah state law and the specific needs of your LLC.
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 Utah, 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.
Utah LLC Operating Agreement Template
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