I formed a single-member LLC last year for my freelance design work. I keep hearing mixed things about whether an operating agreement is actually needed. Some say it's pointless since there's only one member, others say it's crucial for liability protection. I don't want to pay a lawyer if I can avoid it, but I also don't want to risk piercing the veil. What's the real deal here?
LLC Formation
Does a single-member LLC really need an operating agreement?
Short answer: yes, get one. Even for single-member. Banks and courts sometimes ask for it. It's cheap insurance. You can find templates online.
Oh great, another 'do I need this' question. Just Google it. But since I'm here: operating agreements are not legally required in most states for single-member LLCs, but they help prove you're running it as a separate entity. So yeah, get one. Or don't. I'm not your mom.
I'm not a lawyer, but I've been running an LLC for years. The key is to avoid coMmingling funds. An operating agreement is just one piece. I have one just in case. It cost me $50 from an online service. Worth it for peace of mind.
Thanks for the replies so far. @GrumpyOtter, do you have a template you recommend? @SarcasticSally, fair enough, but I wanted real experiences. @LawyerDad, what online service did you use?
I used Northwest Registered Agent's template. It was straightforward. But honestly, you can just draft a simple one yourself. Just make sure it says you're the sole member and you have full control.
I still think it's overkill for a one-person shop. But whatever helps you sleep at night. Just don't come crying when you realize you spent money on something you didn't need.
I disagree with Sally. In my state, if you don't have an operating agreement, you might be treated as a sole proprietor in court. That's a huge risk. It's not just about paperwork; it's about legal separation. I'd rather be safe.
ZenPanda is right. Also, if you ever want to bring in a partner or sell the business, having an operating agreement from the start makes things smoother. I used LegalZoom, by the way. It was fine.
LegalZoom is okay but I found their upsells annoying. Anyway, OP, just get one. It's nnot a big deal. Better to have it and not need it.
Alright, seems like the consensus is to get one. I'll check out Northwest and LegalZoom. Thanks everyone! This forum is way more helpful than my Google seqrches.