For a Limited Liability Company (LLC), the Operating Agreement is the single most important internal document. It is a legally binding contract among the members (owners) that acts as the company's internal rulebook, outlining the business's governance, financial structure, and operational procedures.
Even for single-member LLCs, having a signed Operating Agreement is a critical best practice. Dappr automatically generates a comprehensive Operating Agreement for every LLC formed on our platform and provides tools to formally amend it as your business evolves.
Why is an operating agreement so important?
While not always required by the state to be filed publicly, a well-drafted Operating Agreement is essential for several reasons:
It Preserves Your Liability Protection: It is a key piece of evidence that your LLC is a separate legal entity from its owners. This helps to uphold the "corporate shield" that protects your personal assets from business debts and lawsuits.
It Outlines Ownership and Financial Structure: The agreement clearly defines who the members are, their percentage of ownership, their initial capital contributions, and how profits and losses will be distributed.
It Establishes Clear Rules: It sets the rules for how major business decisions are made, how new members can be added, and what happens if a member wants to leave the company.
It Prevents Disputes: By setting these rules in writing, you can prevent future misunderstandings and disputes among the members about how the business should be run. Without an operating agreement, your LLC will be governed by the state's default rules, which may not be suitable for your business.
Your Dappr operating agreement
When you form your LLC with Dappr, we use the information you provide during the formation and onboarding process to generate a customized Operating Agreement tailored to your business. During the company onboarding, the legal representative will have the opportunity to review and make any necessary manual changes before signing. Other members will then be prompted to sign the agreement during their own onboarding.
How to view and manage your operating agreement
All members and users with sufficient permissions can view the signed Operating Agreement in the company's business records.
From the main menu, navigate to Business Records.
Select Documents from the top menu.
Click on the Operating Agreement tab in the sub-menu.
How to amend your operating agreement
As your business grows, you may need to make changes to your Operating Agreement. To be legally effective, these changes must be formally adopted by the members through a resolution. Dappr provides a guided workflow to create and record these amendments.
From the Operating Agreement page, scroll down to the "Amendments to Operating Agreement" section.
Click the + Add amendment button.
A pop-up will appear asking how you would like to adopt the amendment. You have three options:
Add to next meeting: This will add the resolution to the agenda for your next formal member meeting.
Issue written consent: This will create a formal written consent document that can be sent to members for their signature, allowing you to adopt the amendment without a formal meeting.
Amendment is already adopted: Use this option to log an amendment that has already been approved.
You will then be guided to provide a title and the specific text of the resolution (the proposed change).
After reviewing the draft, you can finalize it. If you chose to issue a written consent, it will be created and ready to be signed.
If you are logging a previously adopted amendment, you will be prompted to select the already-adopted resolution from a list, which will then be officially linked to the Operating Agreement in your records. This ensures your company's most important governing document is always accurate and up-to-date.
Dappr is not a law firm and this content is not legal advice. An Operating Agreement is a complex legal document. We recommend consulting with a legal professional for advice specific to your business needs.