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The operating agreement

The document that sets out how an LLC is run.

Getting started · 2 min read · Updated November 11, 2026

In this guide
  1. What it usually covers
  2. Is it required?
  3. One member or several
  4. What FairEntity provides
  5. Keeping it current

An operating agreement is the written contract among the owners of an LLC. It explains who owns what, who makes decisions and what happens when something changes.

What it usually covers

  • Members and ownership. Who the members are and what share each one holds.
  • Management. Whether the LLC is run by its members or by appointed managers, and what each can decide.
  • Money. What each member contributes and how profits and losses are shared.
  • Decisions. Which choices need everyone's agreement and which do not.
  • Changes. How a member can leave, sell their share or be replaced.
  • Ending the company. How the LLC is closed down and its assets handled.

Is it required?

Many states do not require you to file an operating agreement with the state, and some do not require one at all. Even so, it is strongly recommended. Banks often ask for it. It also helps show that the LLC is separate from its owners, and it gives a clear answer when owners disagree.

One member or several

A single owner can have a short agreement. With several owners, a more detailed agreement matters more, because the default rules of the state may not match what you intended.

What FairEntity provides

We prepare an operating agreement from a template using the information you give Fae, and place it in your dashboard. A template covers common situations and cannot cover every one.

Keeping it current

Update the agreement when members, ownership or management change, and keep a signed copy with your company records.

If your company has several owners, or unusual arrangements, a licensed attorney can tailor the agreement to your needs.

This is general information, not legal or tax advice.

General information, not legal or tax advice. If your case needs it, a licensed attorney or accountant can advise you. Read the disclaimer

Related questions

What people usually ask after reading this.

Can I open a US company if I live abroad and have no SSN?

Yes. You do not need an SSN or an to form an or a , and you do not need one to get the company's . Fae asks only for what the filing needs and tells you what each item is for.

What is the difference between an LLC and a C-Corp?

An is the simplest way to own a business in the US, and its internal rules go in the . A is a standard corporation, the kind investors usually ask for, and its rules go in the Bylaws. Fae explains the differences and recommends one for your situation, and the decision is yours.

What does the formation include?

We check the name, file with the state, order the for the first year and prepare your or Bylaws. Help opening a bank account comes with every order. The , , business address and are separate services you choose.

What is an Operating Agreement?

It holds an 's internal rules: who owns what percentage and how decisions get made. We draft it from your company file, a person on the team reviews it, and it appears in your dashboard with your other documents. For a corporation the equivalent document is the Bylaws.

Is Fae a lawyer? Is she a person?

Fae is an AI assistant, and she says so if you ask. She is not a lawyer and FairEntity is not a law firm. What cannot be automated is done by a person on the team, and you see the same progress in your dashboard.

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Still have a question about your case?

This guide is general. Fae can apply it to your company, your country and your state.