Single-Member LLC Operating Agreement

Single Member LLC vs Multi Member LLC

Sometimes people may confuse Single Member LLC's with Multi Member LLC's. After all, their structures are practically identical.

• In a Single Member LLC, the entire business is controlled by one sole individual.
• In a Multi Member LLC, the company will have at least two owners. Again, just like a Single Member LLC, the members of a Multi Member LLC prove that it is an independent legal entity not related to the personal assets of its members. This type of LLC must decide how profits or losses will be shared in relation to each member. Usually, this is proportional to the sum of money invested in the company or the degree of involvement within the company.

This presents both advantages and disadvantages for a business, depending on the requirements of the business. On one hand, if you are a Single Member LLC this means that you can run a business entirely independently and make the decisions that you think are necessary, without having to check them over with other members. But this does mean that you are in charge of everything yourself, all the responsibilities are dealt solely by one individual.

On the other hand, working with a Multi Member LLC business structure provides you with the opportunity to discuss decisions as a team, where each member can put their expertise, knowledge and experience to good use. But this does mean that sometimes as a member, you have to compromise and possibly stick with decisions that do not fit your ideas or vision.

How to Write a Single Member LLC Operating Agreement?

Keep in mind that the procedures and requirements could slightly differ depending on the state. After you have searched the online database of the Secretary of State and found an available name, you have the complete package of documents (Articles of Organization) and you have paid the filing fee - it makes sense to draft up a simple Single Member LLC Operating Agreement. This should include the following steps:

1. Information about the company. This should include the name, address and service of the business.
2. Details about the registered agent. If required by the state (not all), include their name and address too.
3. Ownership. This is simple, one individual owns all of the company and has the right to vote.
4. Management. If you are the only manager, this needs to be stated. Some members choose to hire managers. If this is the case, specify their details, responsibilities and financial package. You may also want to add a section about possible changes in the future in case you decide to include members in the future.
5. Finances. Include any assets that you are adding to the business along with the method of compensation by the LLC. This is particularly important when it comes to taxes.
6. Dissolution of the business and successors. In case of life changing circumstances, you will need a concrete plan and here you can also name any successors of the business.
7. State governing. Include which state will govern the business and agreement.
8. Sign and date in a notary public to have a witness.

How Is a Single Member LLC Taxed?

The LLC itself is not required to pay any taxes and there is no need to file a tax return to the Internal Revenue Service. If you are the only member, you must file reports of any profits or losses on Schedule C along with your 1040 tax return. To do this correctly, you will need all documents relating to any income and expenses associated with your company. Tax must be paid on all profit, regardless of whether or not you have distributed it.

Haven't found the template you're looking for? Take a look at the related templates below:

• Limited Liability Company (LLC) Operating Agreement Template;
• LLC Buyout Agreement Template;
• Partnership Dissolution Agreement Template.