Wisconsin LLC Operating Agreement Template

In Wisconsin, 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 Wisconsin 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.

What Should Your LLC’s Operating Agreement Include?

The operating agreement should clearly define:

1. Name of the LLC: Clearly state the full legal name of the Limited Liability Company.
2. Purpose of the LLC: Describe the primary purpose and activities of the LLC, which should align with the information provided in the Articles of Organization.
3. Duration of the LLC: Indicate the duration of the LLC, whether it is perpetual or for a specified term.
4. Registered Agent and Office: Provide the name and contact information of the registered agent and the registered office address in Wisconsin.
5. Member Details: List the full names and addresses of each member, as well as the percentage of each member’s ownership interest in the LLC.
6. Capital Contributions: Specify the amount and type of initial capital contributions made by each member, and any additional contributions that may be required in the future.
7. Profits and Losses Allocation: Detail how profits and losses will be allocated to each member, typically based on their ownership percentage.
8. Member Rights and Responsibilities: Clearly outline the rights and responsibilities of each member, including their roles in the management and operations of the LLC.
9. Management Structure: Define whether the LLC will be member-managed or manager-managed, and outline the roles and responsibilities of those in charge.
10. Voting Rights: Specify the voting rights of each member and the required majority for decision-making.
11. Meetings: Establish rules and procedures for conducting meetings, including frequency, notice, quorum, and voting requirements.
12. Recordkeeping and Financial Reporting: Describe the recordkeeping and financial reporting requirements for the LLC, including maintaining books, records, tax filings, and annual reports.
13. Distributions: Outline the procedures for making distributions to members, including the timing and method of distribution.
14. Admission of New Members: Define the process for admitting new members, including the approval process and any required capital contributions.
15. Withdrawal, Resignation, or Expulsion of Members: Detail the process for a member to withdraw, resign, or be expelled from the LLC, and any consequences that may result.
16. Transfer of Ownership Interests: Establish the procedures for transferring ownership interests, including the right of first refusal, and any restrictions on transfers.
17. Buyout, Disability, or Death of a Member: Define the process for handling the buyout, disability, or death of a member, including the valuation and payment terms for the member’s interest.
18. Dissolution and Winding Up: Describe the events that would trigger the dissolution of the LLC, and outline the procedures for winding up the LLC’s affairs and distributing its assets.
19. Dispute Resolution: Establish a process for resolving disputes between members, such as mediation or arbitration.
20. Amendments: Specify the process for amending the Operating Agreement, including the required approval from members.
21. Governing Law: Indicate that the Operating Agreement will be governed by and construed in accordance with the laws of the State of Wisconsin.
22. Miscellaneous Provisions: Include any additional provisions relevant to the LLC, such as indemnification, confidentiality, or non-compete agreements.
23. Execution: Include signature lines for each member to execute 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 Wisconsin 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 to consult with an attorney or other legal professional when drafting an Operating Agreement to ensure compliance with Wisconsin state laws and regulations.

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 Wisconsin, 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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