A single-member operating agreement (SMOA) is a legal document that outlines the rules and regulations for a Limited Liability Company (LLC) with only one member. It is a key component to setting up and running an LLC, as it outlines the member’s rights and responsibilities, as well as the ownership and management structure of the LLC. In this article, we will explore the sample LLC single member operating agreement.
Why Do You Need an SMOA?
An SMOA is essential for a single-member LLC to establish its legal structure, outline its financial and management principles, and protect its member’s rights and interests. It is a contract between the LLC and its single member, and it spells out the provisions that govern the LLC`s operations. Additionally, an SMOA helps to protect your personal assets from the LLC`s liabilities and debts.
Sample LLC Single Member Operating Agreement
The following is a general outline of the sections that are typically included in a single-member operating agreement:
Introduction: This section of the document identifies the LLC and its member.
Purpose: The purpose section of an SMOA outlines the reasons why the LLC was formed, the intent of the member, and the LLC’s long-term goals.
Ownership: This section of the SMOA outlines the member’s ownership interest in the LLC and the percentage of ownership.
Management: The management section of the SMOA outlines how the LLC will be managed and who will be responsible for its day-to-day operations.
Meetings: This section of the SMOA outlines the frequency and procedure of meetings, as well as the rules for voting and decision-making.
Capital contributions: This section of the SMOA outlines the initial contribution of the member to the LLC, as well as any subsequent contributions needed to fund the business’s operations.
Distributions: This section of the SMOA outlines the method of distributing profits and losses among the member.
Taxation: This section of the SMOA outlines the tax treatment of the LLC, and how taxes will be paid.
Dissolution: This section of the SMOA outlines the process for dissolving the LLC in the event that it is no longer viable or the member wishes to terminate the LLC.
A single-member LLC operating agreement is an essential legal document that outlines the rules and regulations for an LLC with only one member. It is important that the SMOA is properly drafted and executed to ensure that the member`s rights and interests are protected. Additionally, it helps to establish the LLC`s financial and management principles, as well as the ownership structure. The sample LLC single member operating agreement serves as a starting point for drafting your own SMOA. However, it is essential to have it reviewed by an attorney to ensure that it complies with the laws in your state and to help mitigate any potential legal issues down the road.