Single Member LLC Operating Agreement Template

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Updated June 01, 2022

A single-member LLC operating agreement is a legal document for a company with only one (1) owner. The form is to be used to help solidify the status as a separate entity from the owner’s personal assets and set rules for its operation.

The owner’s role in the company should be listed including any registered agent, officers, managers, or other positions. Once completed, an original copy should be stored at the principal office location. An operating agreement is not filed with any government office.

Notary Acknowledgment – It’s highly recommended a single-member operating agreement be notarized to prove its authenticity and the date it was signed.

By State

Table of Contents

What is a Single-Member LLC?

A single-member LLC is a company that has one (1) owner and is commonly created for tax planning and to separate the owner from the assets and/or liability placed in the LLC. All revenue that is generated by a single-member LLC, and after expenses have been properly deducted, will be “passed-through” at the same tax rate as the owner’s personal level. Barring a State tax or levy, a single-member LLC does not pay taxes at the entity level. For these reasons, creating an LLC for a small business, real estate venture, or any other tangible or intangible revenue-generating asset is highly recommended.

IRS Definition

“An LLC is an entity created by state statute… An LLC with only one member is treated as an entity disregarded as separate from its owner for income tax purposes (but as a separate entity for purposes of employment tax and certain excise taxes), unless it files Form 8832 and affirmatively elects to be treated as a corporation.” (source)

To summarize, a single-member LLC is a separate entity from you personally, but it is also different from a corporation. It will be reflected on your federal tax return, but you won’t be personally responsible for its debts and obligations.

How to Form a Single-Member LLC (5-Steps)

Forming an LLC involves a filing fee and can usually be created within a week depending on the laws and procedures in the State it’s being created. In most States, the process is as follows:

Step 1 – Search for Duplicate Names

Search the name of the LLC in the State business database. Before starting the process it’s recommended to research the name of the LLC before filing for registration. Each State has an office, most commonly the ‘Secretary of State’, that controls the incorporation of entities. In this department, there is an online portal that allows a user to look up a name and see if there is a company, corporation, or partnership that is already in existence with the name selected.

  • Name Reservation – In most cases, if there are no common matches, the name will be available. If the applicant wants to be sure their name is available before filing, they can file a “Name Reservation” for a small fee which will secure their name for a period of thirty (30) to one-hundred and twenty (120) days depending on the State.
  • Trademark Office (USPTO) – It is recommended to conduct a search in the USPTO Trademark Database to ensure the name of the business is not already registered for its usage. Remember that if a name is trademarked, you cannot use the name attached to its specific use. For example, a business cannot register as the name of “Nike LLC” and make sneakers in Montana.

Step 2 – Complete the ‘Articles of Organization’

The Articles of Organization is the official term for the application which is now online in most States. When applying, be prepared to answer the following:

  • Effective Date – The 1st day of business.
  • Request for “Certificate of Status” – An official document or seal.
  • LLC Name – Must end in “Limited Liability Company”, “L.L.C.”, “or “LLC”
  • Mailing Address
  • Manager(s)
  • Officer(s)
  • Principal Place of Business – The main office.
  • Purpose of Business
  • Registered Agent – Representative of the Company. It can be the owner but is recommended to be their legal counsel.

Select your State and use the guide to create an LLC and only pay the State required fees.

Step 3 – Pay Filing Fee

Each State has a filing fee that is required to register the LLC ($50 to $800). Be sure to pay the fee online or by sending a check that is payable to the appropriate State office. Payment of the fee will mark the end of the registration process with the new entity taking anywhere from 5 to 30 days to process.

Step 4 – Write a Single-Member Operating Agreement

The form is the only document that outlines the ownership of the business. It is written as protection from any partners, employees, spouses, or any other individuals from claiming they were promised ownership (verbally). In addition, it’s recommended a notary public acknowledge the signature of the single owner.

Step 5 – Get an EIN (Employer Identification Number)

After the LLC is created, this is the first (1st) to do. An Employment Identification Number (EIN) is required for the business to open bank accounts and pay taxes. Therefore, the LLC will not be able to generate any money until this is complete. It’s free and an EIN can be obtained online in 15 minutes or by sending the paper application in the mail.

Upon successful registration of the EIN, the LLC is ready to begin conducting business transactions.

LLC vs Sole Proprietorship

The main difference is with an LLC the owner is free of personal liability due to the company acting as a “shield” from legal and financial liability to the owner. While in a sole proprietorship, the business owner remains liable for all financial and legal ramifications of negligence, lawsuits, and any other type of exposure.

LLC 

  • Allowed to hire employees;
  • Acts as a separate entity;
  • Can create bank accounts;

Sole Proprietorship

  • Not allowed to hire employees unless the owner gets an EIN;
  • Does not act as a separate entity;
  • Can only create bank accounts under a DBA or under a personal name.

Frequently Asked Questions (FAQs)

Does a single-member LLC need an operating agreement?

Even though an operating agreement is highly recommended it is only required in the states of California, Delaware, Maine, Missouri, and New York.

How does a single-member LLC pay taxes?

A single-member LLC does not pay taxes at the company level (unless there is a state LLC tax). The profits from an LLC are pass-through to the owner and paid on their IRS Form 1040.

Can a single-member LLC be an S-Corporation (S-Corp)?

Yes by filing IRS Form 2553 within 75 days of the effective date or in any tax year prior to March 15th.

Can a single-member LLC be a C-Corporation (C-Corp)?

Yes by filing IRS Form 8832.

Can a married couple be in a single-member LLC?

No. By definition, a single-member LLC only has one (1) owner. Although, adding a spouse requires amending the entity’s operating agreement which will convert it to a multi-member LLC.

Can you sell a single-member LLC?

Yes, the owner can sell the entity just like any other business.

Can a single-member LLC add members?

Yes, a single-member LLC can add members. Although, this will make the entity a multi-member LLC which will require amending the operating agreement.

Can a single-member LLC hire employees?

Yes. The term single-member only refers to there being 1 owner. There can be as many employees as the owner desires.

Can a single-member LLC pay rent to the owner?

Yes. A single-member LLC can pay rent to the owner if, for example, the owner is also the landlord. Although the property cannot be in the same single-member LLC, it must have separate ownership.

Do single-member LLCs pay quarterly taxes?

Yes. Due to the single-member paying self-employment taxes on the income being received, it’s required to pay the estimated tax throughout the year (April 15 June 15, September 15, and January 15). This can be completed by registering with the IRS through their Online Portal (EFPTS).

How to Write

Download: Adobe PDF, Microsoft Word (.docx), Open Document Text (.odt)

Title Introduction

(1) Name Of LLC. This paperwork must clearly introduce itself to any Reviewers at first glance as a specific agreement with the concerned Single Member Limited Liability Company. Therefore the title of this document expects a production of the legal name of the Single Member Limited Liability Company whose structure will be discussed. Review this Entity’s articles of organization then transcribe its full name to the “Name Of LLC” line in the title.

(2) State Of LLC. The State where the Single Member Limited Liability Company filed its articles of organization must be identified. Produce the name of this State on the line labeled “State Of LLC.”

(3) Operating Agreement Effective Date. The current document must have a predetermined date of effect. This will be the calendar date marking the day when the Single Member and the Limited Liability Company begin the working relationship that will be defined. This date may not be before the signature date of the Single Member or the date of the concerned Entity’s formation.

(4) Limited Liability Company Name. The introduction to this agreement requires some additional information produced to complete its language. Supply the full name of the Single Member Limited Liability Company on the first line following the reported date of this agreement.

(5) Owner As Single Member. The Limited Liability Company Member who shall sign this agreement as its Single Member must be named in the last available space of the introduction. Only the full legal name of the Party who shall sign this agreement as the Single Member of the Limited Liability Company should be presented in this space.

I. Formation Of LLC

(6) Governing State. The First Article of this agreement must make a statement regarding how the Limited Liability Company was formed. The name of the “Governing State” where it was created through its articles of organization should be documented in the appropriately labeled area of this statement

(7) Articles Of Organization Report. The precise date when the articles of organization of the Limited Liability Company were approved and made active by the State where they were submitted must be furnished to the second area of this statement.

II. Purposes And Powers

(8) LLC Purpose. The reason for forming the LLC as defined in its articles of organization must be documented in Article II. Seek the blank line available in Statement (A), then define why the Limited Liability Company was formed by recording this purpose. It is strongly recommended that the purpose documented in the Limited Liability Company’s articles or organization be transcribed to this area.

Formal Execution Of Document

(9) Member’s Signature. The Single Member who will enter the above agreement with the defined Limited Liability Company as its only Member must sign his or her name to do so.

(10) Print Name. The full name of the Single Member who has signed this paperwork must be supplied to the area below his or her signature.

(11) Date. Once the Single Member has completed the act of signing and printed his or her name, the current date must be documented. Since it can be potentially crucial to be able to verify the Single Member signed this paperwork upon a certain date, it is strongly recommended that the signature process is subjected to notarization when it occurs regardless of the requirements of the State that governs the Single Member Limited Liability Company’s behavior.

(12) Single Member Signature Notarization. The final area may not be completed by any Party other than a licensed Notary Public who has verified the Single Member’s identity and has subjected the signing to notarization. He or she shall complete the “Notarization” section as proof that this process was completed.