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LLC Operating Agreement

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A California multi-member LLC operating agreement is a legal document that is used by companies/businesses that shall be managed by more than one contributing member. The document will assist in outlining obligations, responsibilities, and standard operating procedures for all members to agree to and adhere to as long as the company remains in business. Amendments are possible, as long as all members agree to the changes.

The State of California requires that this agreement is completed and filed, prior to the operation of the business. Implementation of the document protects the member(s) in the event of a lawsuit or business failure, by separating the member’s personal property (personal financial accounts, homes, vehicles, trust accounts etc). Once completed, the signatures of all members must be submitted in the presence of a notary public.

How to Write

Step 1 – Download the Document – Establish the company name in the first line, first page of the document

Step 2 – The Agreement –

• Enter the date in which the document shall become effective in mm/dd/yyyy format
• Submit all members names into the lines provided

Step 3 – Formation –

• Enter the effective date mm/dd/yyyy format
• Submit the name of the company

Name –

• Provide the name in which business will be conducted

Purpose – Read the statement

Office –

• Enter the address where the company’s complete principal business will be conducted

Registered Agent –

• Submit the full name of the company agent who was initially registered
• Submit the complete registered address

Term –

• Submit, into the line provided, the date in which the term of the company shall commence

Proceed – Review the following information

• Names and Addresses of Members
• Admission of Additional Members

Step 4 – Capital Contributions – All members must read the following sections:

• Initial Contributions
• Additional Contributions
• No Interest on Capital Contributions

Step 5 – Allocation of Profits and Losses; Distribution – Members must review:

• Profits/Losses
• Distributions
• No Right to Demand Return of Capital
• Indemnification
• Powers and Duties ( 5.1 through 5.3)
• Salaries, Reimbursement, and Payment of Expenses (6.1, 6.2 and 6.3
• Books of Account, Accounting Reports, Tax Returns, Fiscal Year, Banking (review 7.1 through 7.4)

Step 6 – Transfer of Membership Interest – All members must carefully review all of the following sections and subsections)

• 8.1 – Sale or Encumbrance Prohibited
• 8.2 – Right of First Refusal – Review all subsections – (8.2.1 through 8.2.5)
• 8.3 Substituted Parties – Read the subsections (8.3.1 and 8.3.2)
• 8.4 – Death Incompetency or Bankruptcy of Member – Members must also read subsection 8.4.1
• 8.5 – Death Buy Out – Members must carefully review the subsection(8.5.1 through 8.5.6)

Step 7 – Dissolution and Winding Up of the Company – Members must read the following sections and subsections:

• Dissolution – All members must read 9.1 through 9.1.4
• Winding Up – 9.2 through 9.2.3

Step 8 – General Provisions – All of the company’s members must review the following sections:

• Amendments
• Governing Law
• Entire Agreement; Modification
• Attorney Fees
• Further Effect
• Severability
• Captions
• Notices

Step 9 – Once the members have reviewed and completed the entire document, while in the presence of a Notary Public, all members must:

• Print or type their names (respectively)
• Each member, must also enter their signatures

Step 10 – Listing of Members – (Schedule – 1) – Provide the following information:

• Establish the listing by entering the name of the company
• Enter the date in which the member’s list is created, in dd/m/yy format
• Each member must submit their names
• The same members must enter their complete physical addresses
• All members must provide their typed or printed name
• All members must provide signature in agreement to the list

Step 11 – Listing of Capital contributions – (Schedule 2 ) – Submit the company name in the first line on the document and proceed by entering:

• The members names
• Each member’s individual, monetary contribution
• Respective members percentage of ownership
• AND
• Date the member’s signatures in dd/m/yy format
• Members typed or printed names
• Members signatures

Step 12 – Listing of Valuation of Members Interest – (Schedule 3) – Enter the company name at the top of the page and proceed by providing the following:

• Members names
• Members Valuation Endorsement
• AND
• Submit the date of members printed or typed names
• Submit each member’s signature

Step 13 – Notary Seal of Acknowledgement – To finalize the document, once the notary has recorded all witnessed signatures –

• The notary shall complete the the Seal of Acknowledgement document
• The notary public shall then provide their own signature and affix the official notary seal

When all of the proper procedures have been completed and the document is completed and signed, copies must be made and distributed to all members for safe keeping. This document is required so that each member may show certification as a member of the business.