Nevada LLC Operating Agreement
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Whatever type of LLC you form—single-member, multi-member, member-managed, or manager-managed—you need a strong LLC operating agreement.
An operating agreement is an internal document that describes the structure of your LLC as well as its governing rules and regulations. This includes member ownership interest, how your LLC is managed, and the rights and obligations of members and managers.
A well-written operating agreement helps keep your LLC running without a hitch and protects not only your business but also its members.
Writing an operating agreement can be tough, so we have a free attorney-drafted template you can use to start drafting your LLC operating agreement, with or without ordering our LLC Business Incorporation Service.
What is a Nevada LLC Operating Agreement?
In short, an operating agreement is a written legal document that defines and outlines the rules and member duties authorized by an LLC to provide a framework for an LLC’s operation and management.
More specifically, an operating agreement behaves as a legal contract that binds the members and managers to its terms, signed by all the members. An LLC’s Operating Agreement becomes the governing document for all of the company’s processes, activities, and decisions.
Think of an operating agreement as your LLC’s user manual.
The guidelines established by the operating agreement are tailored to fit the needs of the members and owners. An operating agreement is to an LLC what Bylaws are to a corporation, or what a Partnership Agreement is to a partnership.
Do You Need to File Your Operating Agreement with the Nevada SOS?
You don’t have to file your operating agreement with the state. However, you should have a copy of your operating agreement easily available so that you can refer to it when necessary. It’s also a good idea to update your operating agreement from time to time to ensure that it continues to meet your LLC’s needs as your business grows and evolves.
When Do You Create Your LLC’s Operating Agreement?
Typically, you’ll create your LLC operating agreement during a member meeting either before or soon after your LLC is formed. If you have a multi-member LLC, having an operating agreement from the start is important because you can record each member’s initial investment and ownership interest in the agreement, which can help prevent disputes over ownership later on.
Free Nevada LLC Operating Agreement Template
Get started on your NV LLC operating agreement using our free template, drafted by our legal team. This template is for single-member LLCs—get access to additional free templates with Registered Agent or LLC Business Incorporation Service.
Ready to begin your operating agreement, but not ready to write the whole thing? Just save your progress and return whenever it’s convenient for you to finish (don’t forget your password).
Reasons to Have a Strong Operating Agreement
There are numerous reasons your LLC needs a quality operating agreement. Here are some of the most common:
Protect your company’s limited liability status
Arguably, the top reason to form an LLC is to have protection (or a “corporate veil”) over personal finances and assets if a lawsuit arises. Keeping your business and personal life separate is required to maintain this protection, and an operating agreement helps demonstrate that separate existence of your LLC from your personal life.
Your operating agreement guards your LLC against courts that attempt to lift or “pierce” the corporate veil, where the courts can put limited liability aside and hold the owners and members financially and legally liable. While an operating agreement isn’t a make-or-break deal for maintaining limited liability, it is proven to help nonetheless.
Provide clarity during disputes
Having an operating agreement to clarify a contentious situation can save you an enormous amount of time, money, and sanity. Conversational miscommunications, whether verbal, over email, or otherwise, about business procedures or member duties are inevitable.
Whether it’s about a change in ownership, specific member duties, or anything in between, it can be covered in the operating agreement and save you from future headaches and legal fees.
Override default LLC statutory provisions
When you create an operating agreement, you’re taking more control over your business affairs instead of letting the Nevada state statutes dictate your affairs. An operating agreement overrides the default rules put in place by the state of Nevada for LLCs that don’t adopt an operating agreement.
The Nevada LLC state statutes are boilerplate language, and typically aren’t specific enough to meet the needs of individual LLCs.
Provide direction for your business
Structure and organization are set out in an LLC Operating Agreement, providing a clear path for all managers and members of the LLC. All business-related discussions and proceedings will flow smoothly and predictably when everyone follows the same path with the same organization towards the common goal.
Spell out complex ownership agreements
Many LLCs have unique ownership agreements that will involve negotiations and special implications. An operating agreement is where a business owner can spell out each and every detail of the complexities within the ownership agreement.
Whether the ownership is divided by percentages or by membership units (similar to shares of stock in a corporation), you can outline it all in the operating agreement.
Demonstrate credibility to banks and lenders
It’s common for banks and lenders to request to see an LLC’s operating agreement before doing business with the LLC. An operating agreement brings formality to your business and shows that your business is a real, properly established business.
Before a bank or a lender is willing to hand over money, they’ll want to make sure you’re a legitimate LLC (plus it may be their policy to only work with LLCs that have an established operating agreement).
Work efficiently with other professionals
Operating agreements help more than just their LLC—they are helpful to plenty of other professionals your business will eventually encounter.
Accountants and tax professionals can help you most efficiently with your financial needs when an operating agreement is involved, just as lawyers would with their legal advice for your business.
Nevada LLC + Operating Agreement + Registered Agent
$571 total
Guide to Creating a Nevada LLC Operating Agreement
When you’re ready to write your operating agreement, here’s what you should include. We recommend having your operating agreement reviewed by a legal professional after you’ve drafted it, just to make sure you’ve covered all your bases.
Keep in mind that every LLC is unique, and there is no one-size-fits-all as far as Operating Agreements go, and these items are meant to be a reference or starting point before you customize your operating agreement.
1. Introduction: Company Formation
This section states the basic information about your company and company formation, which can include, but is not limited to:
- Legal and fictitious company names.
- Member names.
- Principal business address.
- Nevada registered agent name and address.
- Location of key LLC documents, such as the operating agreement.
- Effective date of operating agreement.
- Purpose, such as the industry, service, or nature of the business.
- Statement of intent, which affirms the business is formed under state law and will conduct lawful business.
- Definitions of defined terms, such as book value, fiscal year, etc.
2. Allocations and Distribution of Profits and Losses
LLCs allow for flexibility when it comes to splitting up the distribution of business profits and losses. It’s common for LLCs to distribute profits and losses among members based on ownership percentage, although you can decide on a different arrangement that best meets your needs.
In this section, provide a detailed explanation of how your LLC will distribute its profits and losses to its members. For example, if one member has contributed more funds, but a different member contributes more labor hours for the company, their ownership percentages can reflect this—just provide the detailed explanation of that arrangement here.
3. Voting, Management, and Operations
Whether you have a member-managed or manager-managed LLC, use this section to spell out the management structure for your LLC. You may choose to have members vote on managers, and then assign the managers specific responsibilities, or have the powers and duties of the LLC belong to the members.
4. Records and Bookkeeping
This section provides information about how the LLC will keep its books and records. All books and records regarding finances or affairs are typically kept by the LLC managers or a designated member, and are located at the principal place of business.
5. Capital Contribution
Capital contribution is money or assets given to the LLC initially in exchange for LLC membership interest (ownership investment). This section contains a few different provisions:
- The values of capital contributions made by each member to the LLC, whether by funds or assets.
- Whether or not the members will be required to make further capital contributions later on.
- How much a member’s interest percentage will grow if capital contributions are provided later on.
- The method of raising additional capital that may be required in the future.
6. Membership Changes or Transfers
Down the road, you’ll eventually need to deal with things like membership interest changes and transfers when a member leaves the company (whether by choice, or due to a death, bankruptcy, divorce, etc).
For this section, you can protect that membership interest by giving the other LLC members the first opportunity to buy the interest over non-members. The other members can either purchase the interest or can unanimously approve the transfer of that interest to a third party or non-member.
7. Dissolution
The steps to take during the dissolution, or “wind-down,” of the LLC should be outlined in this section. Usually, the members make an official, unanimous vote to dissolve the LLC.
The debts owed to the LLC’s creditors must be paid out before the members get their interest distribution or assets. The designated manager or member will need to file the appropriate dissolution forms with the Nevada Secretary of State.
Nevada LLC Operating Agreement FAQs
All LLCs should have an operating agreement.
No matter the LLC type, number of owners, or management style, all LLCs should adopt an operating agreement. There’s a common misconception that only certain multi-member LLCs should have an operating agreement, but that’s just not true—single-member LLCs still need operating agreements to uphold their limited liability status and establish ownership of the LLC.
Operating agreements are living documents. Your operating agreement can and should be a working document that changes and grows as your business changes and grows. The Operating Agreement serves as a practical, fluid document that’s meant to undergo changes and additions, which can be done at any time and with the approval of all the LLC members.
It’s a great idea to do so, especially when you want a customized operating agreement. We recommend either creating your operating agreement with the legal help of a lawyer, or at the very least, have a lawyer review your Operating Agreement after you’ve written it.
With flexibility comes complications, and since your LLC is one of the most simple and flexible business structures, it’s important to lay a strong legal foundation to protect you from common complications that can arise.
When we form your business, we’ll provide you with an operating agreement template for free.
The Articles of Organization and operating agreement are two almost completely different documents, sharing only a few similarities.
The Articles of Organization are filed with the state to legally create your LLC. These articles have your company’s basic information, such as names, addresses, and registered agent information.
The operating agreement isn’t filed with the state, so it doesn’t go on the public record. It’s meant to be kept with your company’s other important records. This agreement contains your company’s basic information found on the Articles of Organization, as well as all the rules and member duties for the framework and operation of your LLC.
Operating agreements are not legally required in Nevada.
According to the Nevada Revised Statutes (NRS) 86.286 Operating Agreement clause, “A limited-liability company may, but is not required to, adopt an operating agreement.”
Yes. Your Nevada operating agreement isn’t officially adopted into your LLC until a unanimous written vote or consent of the members happens (or by the sole member), and all the signatures are in place at the bottom of the operating agreement.
Amending or revising your operating agreement can be done at any time and only requires a few steps:
- Have all the members vote and approve the amendment.
- Document it in writing, and have all the members sign the amendment.
- Keep the amendment with the original operating agreement.
The operating agreement itself can have a provision regarding the method to amend your operating agreement, as well. This means you may not have to have a 100% approval vote to make amendments, depending on what you and your members decided on previously.
On the SilverFlume business portal, you can find a digital operating agreement tool to help you create your own customized operating agreement.
Nevada LLC
+ Las Vegas Business Address
$517 Total (includes state fees)
