If you’re starting your own LLC, first of all, congratulations! This is a step towards your financial and business freedom. To make those dreams come true, you’re going to need a single member LLC operating agreement.

Yes, you read that right. A single member LLC operating agreement has significant benefits just like multi-member LLCs, and in some states, creating one is a legal requirement. If you don’t have a single member LLC operating agreement yet, there are a few filing instructions you should keep in mind. Read on to gain a finer grasp of these instructions as well as the reasons why you should bother with a single member LLC operating agreement in the first place. We’ve also included the basic steps of forming an LLC.

7 Reasons You Need an Operating Agreement for Your Single Member LLC

Even as a single business owner, an operating agreement has some significance.

1. Abiding by California Law

It’s not a requirement to have an operating agreement when forming your single member LLC in most states. However, in California, it’s a legal requirement to create an operating agreement for every type of LLC.

2. Organizing Your Business

An operating agreement enables you to set rules for your LLC. As the name suggests, an operating agreement helps in defining how you want your business to “operate.” It helps you to plan, organize, and make critical decisions for your company. Also, the operating agreement grants you the freedom to set company rules that suit your needs instead of defaulting to standard state rules.

3. Acquiring Funding

When requesting funding, having an operating agreement in place gives you a great advantage. You can convince potential lenders of why your business is worthy of investment using this as evidence.

4. Fostering Growth

When starting a company as a single member, you should be optimistic that other people may team up with you in the future. After all, if you end up scaling your business, you’re going to need help with your business activities. An operating agreement paves the way for this.

5. Navigating Legal and Financial Regulations

When handling legal and financial issues that pertain to your business, an operating agreement has great significance. During such instances, the document can help in outlining your:

  • Capital contributions
  • Decision-making authority, and
  • Distribution rules

6. Limiting Liability

Lastly, this special document can also help in separating your business from personal property. When your business experiences some legal issues, your personal property won’t be affected in any way.

7. Planning for the Worst

As the sole manager for your single member LLC, the operating agreement helps to clarify who takes over the management if you become incapacitated.


What Are the Components of a Single Member LLC Operating Agreement?

Now that you know why a single member LLC operating agreement is so vital, you may decide to draft the operating agreement for your LLC based on the manner you wish to handle your business affairs. However, to ensure consistency, you need to make sure to include some specific components.

A comprehensive single member LLC operating agreement is more formal and applicable in various business transactions, such as seeking loans. They also guide how you would wish to organize and run your company and other personal affairs. So, for best results, be sure to cover the following areas in your single member LLC operating agreement.


Are you the sole manager of the company, or have you’ve appointed someone as a manager? You then state your personal liability as the sole manager if that’s the case.

Keep in mind that as a sole manager, you need to choose a person that will serve as a successor manager if you become incapacitated or pass away. If you wish to appoint managers to run the company and other personal finances on your behalf, you must use this section to state the relationship between you and them. Many people choose to appoint a spouse, relative, or even legal counsel.


This section is easy to fill out. It only demands your information as the sole owner of the business. Here, you need to state that all the voting rights will fall under your powers. Even in the case of a single member LLC, you need to state this in case things change down the line.

Also, the filling instructions require you to indicate your limited liability for accrued debts and liabilities of the single-member LLC. You must indicate your tax status as well.

Contribution and Distribution

Although you operate your business as a single member, you must state the nature of your initial capital contribution and distribution. How much money will you contribute to the business monthly or annually? Are the contributions in the form of cash or other business assets? You need to indicate all this in the key documents for your business. The nature of your contributions is also important for tax purposes.

You also need to provide information on how you’ll subdivide the profits and losses. This may seem obvious, but you still need to indicate it in the operating agreement for informational purposes.


Though optimism is admirable and even vital in business, you should also anticipate the worst. By this we mean: how will you dissolve your business if forced to do so?

Even if the company has some liability protection, you must state how you can dissolve the company if the worst hits you. Having a comprehensive single member LLC operating agreement in place will provide a good roadmap towards dissolving the business should the need ever arise.

General Rules

Yes, even general rules apply to your single member LLC. You need to state in the company documents how you want things done. This can become a reference point if violations should ever occur, especially if your company evolves into a multi-member LLC.

Additionally, the default rules can help you in appropriately managing the LLC. You may, for example, set rules that pertain to the protocol for record-keeping, finding business partners, and other important aspects of business operations. Think of it as a roadmap for how you’ll do things.


Like any other document, filing instructions demand that you sign off this crucial document. Appending your signature implies that you’ve proofread and agreed to every detail included in the document. Here, the document only needs one signature (of the sole owner). Lastly, you must safely store the document and make any copies if necessary.

Adhering to these sections when drafting your operating agreement is important. It helps you look at your company from a different perspective of business services. It also challenges you to think about various issues that can arise inside and outside your business. Finally, you can use it to plan for many things in advance (such as the dissolution of the business). With a good single member LLC operating agreement, you’ll always be prepared.

Single member LLC operating agreement

Five Essential Steps Required to Form a Single Member LLC

You now know how to draft an operating agreement template, but do you need to know the essential steps of forming a single member LLC?  Remember that each step needs to adhere to state laws.

1. Research Any Duplicate Names

First, make sure no other company uses the name you’ve chosen for your business. Check your state’s business database to confirm this.

Each state, including California, has a department that deals with the incorporation of each entity for purposes of business. You only need to access their online portal and check whether another corporation or company uses your name.

Keep in mind that you can’t use a name that’s been trademarked by someone else. To make sure this isn’t the case, you need to research the USPTO trademark database. If you find that the name already exists in the database, you aren’t allowed to use it.

If you find that your name is free to use, you can choose to reserve it. Through the “name reservation” feature, you can book the chosen name so that no one else uses it. You’ll have to pay a small fee to implement this. You can reserve a name for 30-120 days, or you can simply get a jumpstart on creating your LLC now!

2. Complete Your Articles of Organization

The articles of organization are the first step towards providing critical details of your business. When filing this document, you need to provide details such as:

  • Name of your LLC
  • The mailing address and main location of the business
  • Your objectives
  • The official day your business starts
  • Request for “certificate of status”
  • List of managers and officers
  • A registered agent for the company (this may be you)

3. Pay the Filing Fee

To complete the filing process, you need to pay the required fees. In most states, this amount ranges from $50-$800. You can pay the fee through your state’s online platform. You can also send your payment through a check.

After the processing of the payment, it takes around 5 to 30 days for the business entity to get approved. Then it’s time to get working!

4. Draft Your Single Member Operating Agreement

As you know, your single member LLC operating agreement is crucial. Once you’ve crafted the perfect agreement for your business, don’t forget to sign your document before the notary public as a formality.

5. Get an Employer Identification Number (EIN)

The last step to starting your business is obtaining the EIN. This number is special because it helps to create bank accounts and start paying taxes for your business. You can’t do any business transactions without obtaining this number.

In just 15 minutes, you can acquire your EIN online. You can also send paper applications using your mail. You can perform an online application for your EIN here.


Get a Single Member LLC Operating Agreement from A People’s Choice

If you have further questions or queries concerning the filing instructions for a single member LLC operating agreement, you can consult a legal document assistant like A People’s Choice. The services of a legal document assistant are easy to access and also much cheaper than hiring a business attorney.

At A People’s Choice, we can help you in addressing every aspect of your operating agreement. Contact us here or call us at 800-747-2780 for detailed guidance.