A Perfect Operating Agreement in 2 Easy
1. Answer a number of
simple multiple choice questions
2. View your customized Operating
made it EASY for you
• Created by top law firm attorneys
• Instant Operating
Agreement – No Waiting
• Customized for your
• Easily correct or
update your Operating Agreement
Your LLC Operating Agreement Checklist|
1. Decide a
name for your LLC
2. Principal Office
3. Registered Agent/Office
4. Initial members
5. Decide the ownership interests of each member
6. Decide the amount of capital each member will contribute.
7. Will any members be granted an interest solely for
the performance of services?
MEMBER LLC OPERATING AGREEMENT
Single Member Operating Agreement
It is important to create an Operating Agreement to separate
the LLC from the sole individual member. Without the formality
of an LLC Operating Agreement, the LLC would look a lot like
a sole proprietorship – which does not limit a member’s
personal liability for business debts. Having a formal written
Operating Agreement will lend authority to your LLC's separate
existence. In addition, without an LLC Operating Agreement,
the basic operation of the LLC would be governed by state law,
which may not be advantageous to the LLC, it members, or the
business it conducts.
The member of a single member limited liability company (“SMLLC”)
will benefit from the limited liability associated with a LLC
as well as the benefit of a single level of tax and the flow-through
of business losses.
For tax purposes, a SMLLC is treated as a sole proprietorship
and will not require a separate federal income tax filing. The
income tax can be reported on schedule C of the member’s
personal income tax return (Form 1040). For federal income tax
purposes, a SMLLC is disregarded. Therefore, if a SMLLC is treated
as a disregarded entity for federal income tax purposes, the
income of the LLC is taxed to the owner directly, without any
entity level tax. In addition, LLC losses would “flow
through” to the member and the member could deduct his,
her, or its ratable share of the losses generated.
Over the years, there has been confusion regarding SMLLCs, specifically,
how they can report and pay employment taxes.
The confusion in this area arises when determining employment
tax requirements for an SMLLC that is a disregarded entity.
Notice 99-6 gives the SMLLC classified as a “disregarded
entity” two options for reporting and paying employment
1. Using the name and EIN assigned to the LLC, or
2. Using the name and EIN of the single member owner
Even if the employment tax obligations are reported using the
SMLLC’s name and employer identification number (EIN),
the single member owner retains ultimate responsibility for
collecting, reporting and paying over the employment taxes.
LLC Operating Agreements