Virginia LLC Operating Agreement
An operating agreement is an important internal document for your Virginia LLC. Your company’s operating agreement:
- documents essential information, including everything from the location of your records to your company owners and their initial contributions
- provides rules for procedures like voting, allocating funds, changing roles or ownership, and even dissolution
While Virginia statutes do not specifically require LLCs to have an agreement, your operating agreement is a legally recognized document. As such, a thorough agreement has the power to prevent commonplace issues and protect your company from a variety problems.
Benefits of an LLC Operating Agreement
More specifically, having a Virginia LLC operating agreement will help you:
- Show proof of ownership: In various circumstances you’ll be expected to show proof that you own your company. The fact that your articles of organization don’t have to include the names of any LLC members is helpful when it comes to maintaining privacy, but not when it comes to proving you own your LLC. Your operating agreement, on the other hand, includes ownership information.
- Maintain limited liability: Having a well-written operating agreement can help verify that your company operates as its own legal entity, apart from you. This could be useful if you ever have to defend your business practices in a court of law.
- Stay organized: Establishing the rules and procedures for your company from the beginning streamlines your decision making later. Knowing the procedures for distributing profits and losses, for example, means you’ll have a consistent method for managing your assets over time.
- Avoid internal conflict: Similarly, when all the members of your company agree to the rules and procedures early on, this can prevent major arguments later on.
- Establish your own systems: Without an operating agreement, your LLC would be subject to the default LLC statutes contained in the Virginia Limited Liability Company Act. Some of these statutes might work for your company, but the problem is that not all companies have the same needs across the board. An operating agreement will help you customize the internal operations within your LLC to suit your specific company’s needs.
How to Get an Operating Agreement for Your Virginia LLC
Because it’s an internal document (as opposed to a public filing), you’re responsible for drafting your own operating agreement. However, that doesn’t mean you need to create one on your own. For a strong operating agreement, you can:
- Hire a lawyer: This will ensure your document complies with the law and suits your needs. However, hiring a lawyer will probably cost you several hundred dollars.
- Get documents for FREE: When you hire us to form your business, we provide a collection of key initial documents, free. These documents include a lawyer-drafted operating agreement template, pre-populated with your business information, along with initial resolutions, membership certificate templates, and more.
FAQ: Virginia LLC Operating Agreement
Does Virginia require an operating agreement?
According to VA Code § 13.1-1023 (2019), the members of a limited liability “may enter into” an operating agreement, which implies an operating agreement is not required by Virginia law. However, an operating agreement is an essential tool for your business. The process of completing an operating agreement doesn’t have to be befuddling, expensive, or time-consuming—especially considering you get an operating agreement template for FREE when we form your Virginia LLC.
Does a single-member LLC need an operating agreement in Virginia?
Limited liability companies are not required to have an operating agreement in Virginia, but it’s a good idea to have one anyway—even if you own a single-member LLC. It may seem strange to essentially draft an agreement with yourself, but the significance of your operating agreement extends beyond the day-to-day operations of your business. For example, you may need your operating agreement to prove proof of ownership when opening a bank account for your business. Or, it may become helpful in a court of law if you ever have to defend your business practices.
Can I make my own operating agreement?
You can draft your own operating agreement, but keep in mind that an operating agreement is a legally binding document. You’ll want to make sure you cover several important aspects of your business structure and operations to make sure your LLC is set up in a way that’s most effective for your unique company. Otherwise, you’ll be bound by the state’s default statutes. If you’re not sure what to include in your Virginia operating agreement, it’s a good idea to consult an attorney or use an operating agreement template to help get you started.
What topics should my Virginia operating agreement cover?
Technically, your operating agreement can cover anything related to the affairs of your business not already covered by state statutes (as long as it complies with the law). But a good operating agreement should include:
Company information, such as:
- Company name and address
- Registered agent
- Business purpose
- Principal place of business
- Members’ names, addresses
- Members’ contributions
Procedures and rules for:
- Adding members and transferring membership
- Allocation of profits and losses
- Bookkeeping and recordkeeping
How do I get an operating agreement with Virginia Professional Services?
It’s easy. When you hire us to form your Virginia LLC, you automatically get a FREE Virginia operating agreement form for your Virginia LLC. Our legal documents are drafted by lawyers, branded with your LLC name, and easy to customize to fit the structure and needs of your company.
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