Single Member LLC Operating Agreement

Published Jun 18, 2025
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What is a Single Member LLC Operating Agreement?

A Single Member LLC Operating Agreement, also known as a "single member limited liability company" agreement, is a legal document outlining the internal operating procedures of a Limited Liability Company (LLC) with just one owner, or member. This agreement, while not required by law in many states, is highly recommended as it provides a written record of the company's operational rules, protects the member's limited liability status, and adds credibility to the business. The structure of an LLC combines the flexibility and tax benefits of a "sole proprietorship" with the liability protection characteristic of corporations.

When Might You Need a Single Member LLC Operating Agreement?

This document is essential when you're establishing a "single member LLC" or converting an existing business into one. It helps in situations where you wish to:

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  • Outline the structure and operations of your business
  • Protect personal assets from business-related liabilities
  • Add legitimacy to your business in the eyes of banks, investors, and potential partners
  • Manage "single member LLC taxes" in an organized manner

Ideal Users of a Single Member LLC Operating Agreement

This agreement is used by anyone choosing to establish a "single person LLC," from freelancers and consultants to small business owners and real estate investors. Even though "llc vs sole proprietorship" is a common debate among entrepreneurs, for those who prioritize legal protection, the "single member LLC" is often the preferred choice.

How This Document Safeguards You

A Single Member LLC Operating Agreement offers significant legal protection. By clearly defining your business as a separate entity, it helps shield your personal assets from business debts and liabilities. Furthermore, it also provides a roadmap for resolving disputes and handling business decisions, thereby reducing the potential for legal conflicts.

Practical Examples of Single Member LLC Operating Agreement Use

  • A freelance graphic designer decides to formalize her business. She establishes a "single member LLC" and drafts an Operating Agreement to lay out how her business will function.
  • A real estate investor sets up a "single person LLC" to protect his personal assets from any liabilities associated with his property investments. He drafts an Operating Agreement outlining the business structure, operations, and how potential disputes will be resolved.
  • An entrepreneur converts his "sole proprietorship" into a "single member LLC" to enjoy better tax benefits and liability protection. He drafts an Operating Agreement detailing the business structure and operations.

FAQs

An operating agreement, in the context of an LLC, is a document that outlines the internal rules and procedures for running the company. For a "single member LLC," it specifies how the business will function, including the owner's rights and responsibilities, how profits and losses will be dealt with, and how the business will be dissolved if needed.

No, an LLC is not the same as a sole proprietorship. While both can have one owner, the key difference lies in the liability protection offered. An LLC protects the owner's personal assets from the business's liabilities, while a sole proprietorship does not. That's why many business owners prefer a "single member LLC" over a "sole proprietorship."

Yes, it is highly advisable to have an Operating Agreement even if you are the sole member. It adds legitimacy to your business, helps maintain your liability protection, and provides a clear framework for business operations.

About this document

A Single Member LLC Operating Agreement outlines the management structure and operating procedures for a single-member limited liability company.

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This document utilizes our advanced PassTheBar AI technology, ensuring bar-exam precision and comprehensive legal coverage.

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This document is designed to comply with the laws of all 50 states.

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Legal Notice: Comments are personal opinions and do not constitute legal advice. Always consult a qualified attorney for matters specific to your situation.