Washington LLC Operating Agreement
An operating agreement is a limited liability company’s governing document. It is written by the LLC’s members, who outline both the management and ownership of the company within the agreement. It is best to think of an operating agreement as a blueprint for the larger structure of your company.
State law does not legally require you to write an operating agreement, and the document is not filed with any government agency. An operating agreement is purely internal, and it may be altered at any time by your LLC members (although an operating agreement usually lays out a procedure for making amendments). With that said, it is unwise to forego writing an operating agreement.
A well-conceived operating agreement will help your company avoid potential conflicts and pitfalls as your business develops. This is especially true if your LLC has multiple members. For example, imagine that you are running your Washington LLC successfully, and after five years one of your members dies. An operating agreement would lay out specifically how that member’s LLC assets would be divided. Without an operating agreement, however, there is no agreed-upon path forward.
This is precisely the kind of development that so often leads to conflicts…and the courtroom.
FREE Washington LLC Operating Agreement Template
Our free online tool allows you to create your own single-member LLC operating agreement. You do not need to sign up with us to use our template. Feel free to download and print this template and use it for you LLC. If you need to put the development of your operating agreement on pause, no problem. We’ll save your progress and you can come back to it when you’re ready. If you do decide to hire us to form your LLC, we’ll keep a copy of your completed operating agreement in your client account so you can access it when you need it.
If you’re starting a multi-member or manager-managed LLC, we have custom operating agreements for you, too! Hire us to form your Washington LLC, and you’ll get a operating agreement specific the type of LLC you’re forming.
What to Include in Your Washington LLC Operating Agreement
Every operating agreement is different, because every LLC has unique needs and concerns it must address. Your operating agreement will not read like the operating agreement of any other LLC.
However, there are broad categories which must be addressed for every company.
LLC Members
Ownership is laid out in the operating agreement. It is important that you list the full legal names and addresses of each member. If membership is ever under question in a court of law, it will not do your business any good to have membership listed merely as: Joe, from Seattle.
- Who are your company’s members?
- What is each member’s ownership percentage?
- What did each member contribute in exchange for their ownership percentage?
- What are the rights and duties of each member?
- How are profits and losses shared?
Rights and duties are critical. Who is authorized to enter into contracts for your company? Who is authorized to open bank accounts and lines of credit? Who is responsible for the company’s financial records, filing taxes, preparing for audits?
Management Structure
A Washington LLC is either managed by its members or by a manager (or managers). When you filed your Certificate of Formation, you were required to choose one or the other.
In your operating agreement, you should detail the specific duties of management. Every company has administrative roles: president, vice president, secretary, treasurer, etc. These do not necessarily need to be official positions, and various roles can be fulfilled by more than one member. What is important is assigning responsibility.
This is also a good place to lay out how management can change. How do you elect a new president? How can managers be removed? What happens in a situation where there is a conflict of interest?
Buying In and Selling Out
An operating agreement should address how new members can be admitted, and how old members can leave the company.
For example, if a member wishes to sell their ownership percentage, are they required to offer their percentage to the current members first? Is the sale dependent upon the approval of all the other members, or upon the approval of the company manager?
The particular procedures for buying-into and selling-out-of your LLC can be written however you like. Determining those procedures at the outset allows for all members to know exactly how the process works.
Amendments and Dissolution
A Washington LLC operating agreement can be changed by its members at any time. But the process for amendments should be detailed within the agreement itself.
- How can an amendment be proposed?
- Who is allowed to propose amendments?
- How many member votes are required to approve an amendment?
Dissolution should also be addressed in your operating agreement. Is dissolution set for a specific date? If not, are there specific events which would automatically cause you to dissolve your Washington LLC (such as the death of a member)? How many votes are necessary to approve dissolution?
Washington LLC Operating Agreement FAQs
Can I write my Washington LLC operating agreement?
Yes, you can write your own operating agreement for your Washington LLC. The state does not require you to hire a lawyer to write and review your operating agreement, but if you choose to write your own it may be a good idea to consult a business lawyer to make sure all of your bases are covered. If you’re up to the challenge and have time to spare doing research, there are plenty of online resources with suggestions and advice on how to write a solid operating agreement.
Or you can use our free tool above to create your own single-member LLC operating agreement! Feel free to download and print out our template. Fill it out as is or adjust it to the needs of your business.
Are WA LLC operating agreements filed with the state?
No. The state of Washington does not require businesses to file their LLC operating agreements with the state. However, it’s a good idea to have a completed operating agreement on hand for other institutions who may request one. For example, most banks will ask for a copy of your operating agreement when you open a business bank account for your LLC.
Are LLC operating agreements legally binding?
Yes. LLC operating agreements are legally binding as long as each member who signs the document is over the age of 18. Whether your operating agreement is printed out as a formal document or written on the back of a Starbucks receipt, if the members agree to its terms and sign, it’s legally binding.
How do I change my Washington LLC operating agreement?
You can change your operating agreement at any time as long as the members are in agreement and are willing to sign the proposed amendment. Strong LLC operating agreements include instructions for the process of making an amendment. Once all the members of LLC have signed off on the amendment it should be included as an addition on top of the original operating agreement. This is better than revising the entire document as it provides a history of the operating agreement’s development. This can be helpful in future disputes if you ever need to prove what changes were made and when.
What happens if I lose my LLC operating agreement?
If you lose your LLC operating agreement, you may need to go through the process of creating a new one and getting membership approval. However, before going through the rigmarole of this process check with the other members of your LLC to see if they still have their copy. The bank you used to open a business bank account may also have one. If you have lost your operating agreement, make sure you get a copy or create a new one as early as possible to avoid complicating potential disputes in the future.
Hire us to form your Washington LLC and your completed operating agreement will be stored in your client account that you’ll be able to access it anywhere at any time.