Single-Member LLC Operating Agreement: Free Template & Guide

Why a Single-Member LLC Needs an Operating Agreement

This is the question everyone asks: "I'm the only owner — who am I making an agreement with?" The answer: you're making an agreement between yourself and the LLC as a separate legal entity. And that distinction is exactly what protects your personal assets.

Courts have repeatedly "pierced the corporate veil" (held LLC owners personally liable for business debts) when a single-member LLC can't demonstrate that it operates as a separate entity. An operating agreement is one of the strongest pieces of evidence showing separation between you and your business.

Beyond legal protection, practical reasons include: banks typically require one to open a business account, it documents your management authority for signing contracts, and it establishes procedures for succession if something happens to you.

Key Clauses to Include

Your single-member operating agreement should include: LLC identification (legal name, state of formation, date of formation, principal office address), member information (your full legal name and address), purpose statement (the business activities your LLC will engage in — keep this broad).

Capital contributions (what you've invested in the LLC — cash, property, services), profit and loss allocation (100% to you as sole member, but documenting this is important), distribution policy (when and how profits are distributed from the LLC to you).

Management authority (your powers as sole member/manager, including signing authority, banking authority, and the ability to bind the LLC to contracts), tax election (how the LLC will be taxed — disregarded entity, S-Corp, or C-Corp), and dissolution provisions (what triggers dissolution and how it's handled).

Management Provisions for Single-Member LLCs

As the sole member, you have full management authority by default. But documenting this authority matters — it tells banks, courts, and business partners exactly what you're authorized to do on behalf of the LLC.

Your management section should specifically authorize you to: open and manage bank accounts, sign contracts and agreements, hire employees and independent contractors, buy and sell property, take on debt, and make all day-to-day business decisions.

Consider including provisions for delegating authority. Even as a single member, you might want an employee or virtual assistant to handle certain tasks. A delegation clause in your operating agreement authorizes specific people to act on behalf of the LLC in defined capacities.

Dissolution and Succession Planning

For a single-member LLC, dissolution is triggered by your decision to close the business, your death or permanent incapacity, or a court order. Your operating agreement should address all three scenarios.

The succession provision is particularly important for single-member LLCs. Without one, your LLC may be left in legal limbo if you become incapacitated or pass away. Specify who inherits your membership interest and who has authority to manage or dissolve the LLC in your absence.

Include a clear process: wind down operations, settle debts, file Articles of Dissolution, file final tax returns, and distribute remaining assets. Even though you're the only member, documenting this process prevents confusion for anyone handling your estate.

How to Customize the Template

Start with our free template and make it yours. Replace all placeholder text with your specific information: LLC name (exactly as filed with your state), your full legal name, your address, state of formation, and date of formation.

Customize the purpose clause to match your actual business activities. While many attorneys recommend keeping it broad ("any lawful business activity"), you can also be specific if your LLC focuses on a particular industry or service.

Review and adjust the financial provisions: your initial capital contribution amount, distribution frequency (monthly, quarterly, or as-needed), and whether you want to maintain a minimum cash reserve in the business before taking distributions.

Common Mistakes to Avoid

Mistake #1: Not having one at all. "I'm the only member, I don't need paperwork" is the most common — and most dangerous — assumption. A court that sees no operating agreement may question whether your LLC is truly separate from you personally.

Mistake #2: Using a multi-member template without modifications. Multi-member templates include voting procedures, buyout clauses, and partnership provisions that don't apply to you and create confusing, contradictory language.

Mistake #3: Not signing and dating it. An unsigned operating agreement has minimal legal weight. Print it, sign it, date it, and keep the original in a secure location. Some LLC owners have it notarized for extra protection, though this isn't required.

Mistake #4: Forgetting to update it. If you change your LLC's tax election, add a member, change your business address, or make a significant capital contribution, update your operating agreement with a written amendment.