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Every Delaware LLC must have an Operating Agreement, but getting one doesn’t have to be expensive. You can download and customize your own Delaware Operating Agreement using our free template below.
In the Delaware LLC Act, this document is called the Limited Liability Company Agreement. We call it an Operating Agreement, but they refer to the same thing.
Here is a Member-managed Operating Agreement template available in 3 formats. This can be used for a Single-Member LLC or a Multi-Member LLC.
A Member-managed LLC is where all the Members (LLC owners) have the ability to legally bind the LLC in contracts and agreements. The LLC Members also run the business and day-to-day operations.
Here is a Manager-managed Operating Agreement template available in 2 formats. This can be used for a Single-Member LLC or a Multi-Member LLC.
A Manager-managed LLC is where one or more designated people (called Managers), have the ability to legally bind the LLC in contracts and agreements. The LLC Manager(s) also run the business and day-to-day operations.
The Members can't legally bind the LLC in contracts and agreements. They also don't take part in running the business and day-to-day operations. Instead, they take a passive/investor role.
However, the Members vote the Manager(s) into their position and are required to vote on certain things, like adding or removing an LLC Member.
Which one should I choose? It depends on how you want your LLC to be managed. Please see Member-managed vs Manager-managed LLC for more details. If you’re not sure which one to use, we recommend using the Member-managed Operating Agreement. This is the most common type of LLC management.
A Delaware LLC Operating Agreement (aka Limited Liability Company Agreement) is a written agreement or contract between the LLC Members (LLC owners). This legal document includes detailed information about LLC ownership structure, who owns the company and how the LLC is managed.
In Delaware, all Single-Member LLCs and Multi-Member LLCs must draft an Operating Agreement, keep it with their business records, and give a copy to all Members.
In some other states, having an Operating Agreement is optional but strongly recommended. But in Delaware, a Limited Liability Company Agreement is required by law for every Delaware Limited Liability Company.
An LLC Operating Agreement is usually required when you open a bank account for the LLC, and it contains important information about the company’s management structure.
Your Operating Agreement will include basic information about your Limited Liability Company. Some of the information will be the same as what is listed in your Delaware LLC Certificate of Formation. Operating Agreements should include:
Your Delaware LLC Operating Agreement will list every LLC Member and how much of the Limited Liability Company they each own.
How much of the LLC someone owns is called their “LLC Membership Interest” (aka Limited Liability Company Interest).
LLC Membership Interests are most often expressed as a percentage (like 5%, 50%, 100%, etc.).
Note: Some people make the mistake of saying they are “shareholders” of an LLC. This isn’t accurate. The terms “shares” or “shareholders” do not exist when talking about LLCs. The term “shares” specifically refers to ownership in a Corporation.
After your LLC is approved, you should open an LLC bank account and put money into that account.
Each LLC Member makes an initial capital contribution. Capital contribution simply means a deposit of money into the business bank account.
You will list the capital contributions in your LLC’s Operating Agreement (aka Limited Liability Company Agreement).
Pro tip: If you complete your Operating Agreement before you have opened an LLC bank account, just enter the amount the Members plan to deposit. If the amount of your deposit changes, it’s okay to edit your Operating Agreement with the actual amounts later.
You will list how your LLC will be taxed in your Operating Agreement. There are four common ways an LLC can be taxed:
Note: Husband and wife LLCs can sometimes be taxed as a Qualified Joint Venture LLC. To do this, the LLC must be formed in a community property state. Delaware is not a community property state, so your Delaware LLC can’t be taxed as a Qualified Joint Venture.
The rules of membership voting will be spelled out in your Delaware LLC Operating Agreement (aka Limited Liability Company Agreement).
If you use the Member -managed Operating Agreement, the voting powers are proportionate to the LLC Membership Interest. Usually, all Members are “voting Members”.
If you use the Manager -managed Operating Agreement, the voting powers are also proportionate to the LLC Membership Interest. Then the Members vote to elect a Manager or Managers. The Manager(s) then has authority to make certain decisions on behalf of the LLC (without needing a vote by the other Members).
However, certain things, like adding or removing an LLC Member, require a vote of the Members (and the Manager has no say). And the Operating Agreement can require written notice about certain types of votes, require a unanimous vote for some items, or contain other rules about voting rights.
Once you finalize your Operating Agreement, make sure all the Members have a copy of the entire agreement.
We recommend keeping a copy of the Operating Agreement with your Limited Liability Company business records.
Yes. As per Section 18-201(d) of the Delaware LLC Act, an Operating Agreement (aka Limited Liability Company Agreement) is required for Delaware LLCs.
An Operating Agreement is required for an LLC to transact business in the state of Delaware. The Members can sign the Operating Agreement before, at the same time, or after you file the Certificate of Formation paperwork.
This requirement also applies to a Foreign Limited Liability Company registered in Delaware.
Why should an LLC with only one Member still have an Operating Agreement?
You still have to have a written Operating Agreement, even if you are the only Member of your Delaware LLC (a Single-Member LLC). It’s state law in Delaware.
Plus: If you go to court, LLC Operating Agreements help prove that your Single-Member LLC is being run as a separate legal entity. This confirms the company’s limited liability status, and that is what protects your assets from personal liability.
Does a Multi-Member LLC need an Operating Agreement?
You have to have an Operating Agreement for your Multi-Member LLC. It’s legally required by Delaware state law.
This document will spell out ownership percentages (and details of deposits into capital accounts), profit distribution, and management structure and responsibilities (to the extent assigned).
Plus: If you go to court, an Operating Agreement helps prove that your Multi-member LLC is being run as a separate entity. A signed Operating Agreement helps protect the members’ personal assets.
Remember, all the LLC Members must sign the Operating Agreement.
Do I have to send my Operating Agreement to the state?
No, you don’t have to send your Operating Agreement to the Delaware Secretary of State, the Delaware Division of Corporations, or any other government agency.
Operating Agreements are “internal documents”. Meaning, the Members just need to keep a copy with their business records.
The Operating Agreement is a legally binding document upon the LLC Members because of the Members’ signatures. It doesn’t need a government stamp of approval.
However, in the future, if your company were involved in a lawsuit or an audit, a court or government agency might ask to see a copy of your Operating Agreement.
Additionally, you may also need to show this document to:
No, your Operating Agreement doesn’t need to be notarized. Each Member just needs to sign it.
Once you (and the other LLC Members, if applicable) sign the Operating Agreement, then it becomes a legal document.
Can I write my own Operating Agreement?
Yes, but we recommend using a sample or template Operating Agreement.
An Operating Agreement is a legal document. You don’t have to hire an attorney to write one, though. Using a template helps make sure you cover everything you need to.
LLC University® offers free Operating Agreement templates that you can download and customize to write your own LLC Operating Agreement.
How do you write a simple Operating Agreement?
If you wanted to write a simple Delaware Operating Agreement without using a template, you could. You’d need to check with the Delaware LLC Act to make sure it meets all the requirements.
For example, at a minimum, you’d want your Delaware LLC name, your Registered Agent information, your business purpose, the names of the LLC Members, and information about initial capital contributions.
However, there is a lot more information that is important to document about your LLC.
It’s probably a lot easier to start with an existing template. We have a free Operating Agreement template you can download on this page.
What is the difference between an LLC and an Operating Agreement?
An LLC (Limited Liability Company) is a type of business structure. It’s a legal business entity that you form by filing a document called the Certificate of Formation with the state.
An Operating Agreement is an internal document that governs how your LLC is run. It contains rules about how much of the company each Member of the LLC owns, and other details about management and taxes.
Said another way, the LLC is your legal entity. And the Operating Agreement is a written set of rules for how the LLC will operate.
You could have an LLC without an Operating Agreement (but you shouldn’t). But you can’t have an Operating Agreement without an LLC.
How do I set up an LLC in Delaware?
Matt Horwitz is the leading expert on LLC education, and has been teaching for 15 years. He founded LLC University in 2010 after realizing people needed simple and actionable instructions to start an LLC. He's cited by Entrepreneur Magazine, Yahoo Finance, and the US Chamber of Commerce, and was featured by CNBC and InventRight.
Matt holds a Bachelor's Degree in business from Drexel University with a concentration in business law. He performs extensive research and analysis to convert state laws into simple instructions anyone can follow to form their LLC - all for free! Read more about Matt Horwitz and LLC University.
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Thanks! You're subscribed √ Your email address is already subscribed.Disclaimer: Nothing on this page shall be interpreted as legal or tax advice. Rules and regulations vary by location. They also change over time and are specific to your situation. Furthermore, this comment section is provided so people can share their thoughts and experience. Please consult a licensed professional if you have legal or tax questions.
Dear Mr. Horwitz, Your page states that DE law requires that an LLC have an operating agreement. You cite to DE law Section 18-201(d) (see: https://delcode.delaware.gov/title6/c018/sc02/index.html). I’ve read the law, and I cannot see where the law requires an operating agreement. Would you please give us the language from that Section that says LLCs require an operating agreement? Thanks. Reply
Matt HorwitzHi Alex, Section 18-201 (letter D) states “A limited liability company agreement shall be entered into or otherwise existing either before, after or at the time of the filing of a certificate of formation and, whether entered into or otherwise existing before, after or at the time of such filing, may be made effective as of the effective time of such filing or at such other time or date as provided in or reflected by the limited liability company agreement.” “Limited liability company agreement” means Operating Agreement and “shall” means it’s required. Delaware is one of the few states that requires an Operating Agreement. However, even if the state didn’t require one, we still recommend having one for your LLC. Hope that helps! Reply
I have a business that has been in existence for 4 years I recently applied for an SBA loan I was approved for the loan, now however they are asking for my Certificate of Formation, Articles of Organization and Operating Agreement. I have all documents except an Operating Agreement…my business is a Single Member LLC, ran by me solely. Can I get into legal trouble if I don’t have an Operating Agreement? My business was formed in Delaware and I recently moved to North Carolina. Reply
Matt HorwitzHi Mike, no, you won’t get into trouble for not having an Operating Agreement for your LLC. It’s not legally required. You can create an Operating Agreement for your LLC and date it the same date your Certificate of Organization was filed. Note, in Delaware, the form to create an LLC is the Certificate of Formation. There is no Articles of Organization in Delaware. That’s the name of the form in other states. Hope that helps. Reply
Sait Kerim OzgenHello Matt, I want to take over ownership of a Delaware single member LLC, and I have non-US resident status. As you know, operating agremeen is not a document that we need to file with the state of Delaware, and Delaware LLCs makes ownership changes through this document. In this case, do I need to buy a new EIN for my new owner, single member LLC? Reply
Matt HorwitzHi Sait, no, you wouldn’t purchase the EIN. Instead, you will just change the EIN Responsible Party with the IRS. The form to transfer ownership of an LLC will be an Assignment of LLC Membership Interest. You’ll also want to amend the Operating Agreement. The states don’t provide the Assignment of LLC Membership Interest. We hope to have forms available to download later next year, but for now, you may be able to find one online. However, it’s better to hire an attorney to make sure everything is done correctly. Also, please keep in mind Form 5472 requirement for foreign-owned Single-Member LLCs. Hope that helps :) Reply
Hi Matt,
I have been reading your articles all day and they were so helpfull. First of all I would like to thank you in advance for your sharings. I am non-USA and living in my home country and want to run an e-commerce business in USA. I have already registered my LLC company in Delaware. as a next step I will buy a virtual address and a phone line than will apply for EIN number. Before taking these next steps let me explain my situation and you may like to guide me on that. As you know, to run an e-commerce business I need to have a bank account and need to link it with several payment methods like PayPal, Stripe.
I have already opened a virtual bank account on payoner but as you know PayPal requires an actual bank account at where I run my business. So I should have a bank account in USA. to have it as you share I can visit USA in person or try to visit local branches in my country. But I know that without visiting USA it is so difficult to have it. Luckly, I have a friend in California who is already working there and have all bank accounts, EIN and other stuff needed. Here is the questions:
-Can I assign my friend as a Manager to the company to use his bank accounts for PayPal and others?
-I am thinking that I should be the Ceo of the company and My friend will me commercial manager. Should that be appropriate? so company will be single member who is me, and my friend will be the manager from outside.
-Do I have to share this with my EIN application or I will keep this form for myself and share it for paypal application and others.
-I have Manager-Managed LLC agreement form but there are a lot of wordings there. Could you please share filled example of this document to be sure that I do not miss any points of it? I will definately want to have my own account there but before that I want to be sure that the business I will run will be profit worthed to visit USA. sorry for long story, I am looking forward to hearing from you as soon as your avaliable. Kind regards, Ben Reply
Hello Ben, I suggest you read this article:
https://www.llcuniversity.com/foreigners/open-us-bank-account-llc-non-resident/ What you need is a bank account at Mercury. There are many online sellers who open PayPal Business and Stripe accounts with a Mercury account. Most of all in Turkey, where PayPal is banned… Best regards,
Sait Reply
Thank you for this amazingly thorough website!! I have been bouncing back and forth between multiple sites all day, until I found this one! Reply
