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Illinois Single-Member Operating Arrangement

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Single-Member Operating Arrangement of Limited Liability Company - State of Illinois

THIS OPERATING ARRANGEMENT is hereby established, this the day of , , by the Initial Member.

ARTICLE I

FORMATION OF LIMITED LIABILITY COMPANY

1. Formation of LLC. The Initial Member has formed a limited liability company in the State of Illinois named ("LLC"). The operation of the LLC shall be governed by the terms of this Arrangement and the applicable laws of the State of Illinois relating to the formation, operation and taxation of a LLC.

2. Articles of Organization. The Initial Member has caused to be filed Articles of Organization, ("Articles") of record with the state, thereby creating the LLC.

3. Business. The business of the LLC shall be:

a)

and

b) To conduct or promote any lawful businesses or purposes that a limited liability company is legally allowed to conduct or promote, within this state or any other jurisdiction.

4. Registered Office and Registered Agent. The registered office and place of business of the LLC shall be and the registered agent at such office shall be .

5. Duration. The LLC will commence business as of the date of filing its Articles and will continue in perpetuity.

6. Fiscal Year. The LLC's fiscal and tax year shall end December 31.

ARTICLE II

MEMBERS

7. Initial Member. The Initial Member of the LLC is .

8. Additional Members. The first new Member, or new Members if several are to be added simultaneously, may be admitted only upon the approval of the Initial Member.

ARTICLE III

MANAGEMENT

9. Management. The Initial Member shall manage the LLC, and shall have authority to take all necessary and proper actions to conduct the business of the LLC.

ARTICLE IV

CONTRIBUTIONS, PROFITS, LOSSES, AND DISTRIBUTIONS

10. Interest of Members. Each Member shall own a percentage interest in the LLC. The Member’s percentage interest shall be based on the amount of cash or other property that the Member has contributed to the LLC.

11. Initial Contribution. The initial contribution of the Initial Member is $ , representing a 100% interest in the LLC.

12. Additional Contributions. In the event additional Members are added, upon a majority vote, the Members may be called upon to make additional cash contributions as may be necessary to carry on the LLC's business.

13. Record of Contributions/Percentage Interests. A record shall be kept of all contributions to, and percentage interests in, the LLC.

14. Profits and Losses. The profits and losses and all other tax attributes of the LLC shall be allocated to the Initial Member until such time as additional Members are added.

15. Distributions. Any Distributions of cash or other assets of the LLC shall be made as determined by the Initial Member or a majority of the Members, as applicable.

16. Change in Interests. If during any year there is a change in a Member's percentage interest, the Member's share of profits and losses and distributions in that year shall be determined accordingly.

ARTICLE V

VOTING; CONSENT TO ACTION

17. Voting by Members. Until such time as additional Members are added, all decisions will be made by the Initial Member.

18. Majority Defined. As used throughout this agreement the term “majority” of the Members shall mean a majority of the ownership interest of the LLC.

19. Majority Required. Any action that requires the vote or consent of the Members may be taken upon a majority vote of the Members, unless unanimous consent is required.

20. Meetings - Written Consent. Action of the Members or Officers may be accomplished with or without a meeting.

21. Meetings. Meetings of the Members shall be held as determined by the Members or as may be called by a majority of the Members.

ARTICLE VI

DISSOCIATION OF MEMBERS

22. Termination of Membership. A Member’s interest in the LLC shall cease upon the occurrence of one or more of the following events:

(a) A Member withdraws by giving the LLC thirty (30) days written in advance of the withdrawal date.

(b) A Member assigns all of his/her interest to a qualified third party.

(c) A Member dies.

(d) There is an entry of an order by a court adjudicating the Member incompetent.

(e) In the case of an estate that is a Member, the distribution by the fiduciary of the estate's entire interest in the LLC.

(f) In the case of an entity that is a Member, the distribution upon dissolution of the entity’s entire interest in the LLC.

(g) A Member, without consent of a majority of the Members, makes certain bankruptcy or creditor-related filings.

(h) Certain proceedings are not dismissed within 120 days.

(i) A trustee, receiver, or liquidator appointment is not vacated within 90 days.

(j) Any applicable state or federal law dissociation event.

23. Effect of Dissociation. Any dissociated Member shall not be entitled to receive the fair value of his LLC interest solely by virtue of dissociation.

ARTICLE VII

RESTRICTIONS ON TRANSFERABILITY OF LLC INTEREST; SET PRICE FOR LLC INTEREST

24. LLC Interest. The LLC interest is personal property. A Member has no interest in property owned by the LLC.

25. Encumbrance. A Member can encumber his LLC interest only with the consent of a majority of the other Members.

26. Sale of Interest. A Member can sell his LLC interest only as follows:

(a) If a Member desires to sell his/her interest, he/she shall give written notice to the LLC of his desire to sell all or part of his/her interest and must first offer the interest to the LLC.

Purchase price threshold: $ in which event the purchase price shall be paid in ( ) equal quarterly installments.

(b) To the extent the LLC does not buy the offered interest, the other Members shall have the option to buy the offered interest at the Set Price on a pro rata basis.

(c) To the extent the LLC or the Members do not buy the offered interest, the selling Member can then assign the interest to a non-Member.

(d) A non-Member purchaser cannot exercise any rights of a Member unless consent is given.

27. Set Price. The Set Price for purposes of this Arrangement shall be the price fixed by consent of a majority of the Members.

ARTICLE VIII

OBLIGATION TO SELL ON A DISSOCIATION EVENT CONCERNING A MEMBER

28. Dissociation. Upon the occurrence of a dissociation event with respect to a Member, the LLC and the remaining Members shall have the option to purchase the dissociated Member's interest at the Set Price.

ARTICLE IX

DISSOLUTION

29. Termination of LLC. The LLC will be dissolved and its affairs must be wound up only upon such a decision by the Initial Member, provided no new Members have been added, or upon the written consent of seventy-five percent (75%) of all Members should additional Members be added.

30. Final Distributions. Upon the winding up of the LLC, the assets must be distributed to creditors, then to Members in satisfaction of liabilities, then to Members for return of contributions and LLC interests.

ARTICLE X

TAX MATTERS

31. Capital Accounts. Capital accounts shall be maintained consistent with Internal Revenue Code § 704 and the regulations thereunder.

32. Sole Proprietorship/Partnership Election. The Initial Member elects that the LLC be taxed as a sole proprietorship, and if additional Members are admitted, as a partnership.

ARTICLE XI

RECORDS AND INFORMATION

33. Records and Inspection. The LLC shall maintain its required records at its place of business and they shall be subject to inspection and copying at reasonable request.

34. Obtaining Additional Information. Each Member may obtain from the LLC certain business and financial information upon reasonable demand.

ARTICLE XII

MISCELLANEOUS PROVISIONS

35. Amendment. Any amendment to this Arrangement may be proposed by a Member and becomes effective when approved in writing by a majority of the Members.

36. Applicable Law. This Arrangement shall be governed by the laws of the State of Illinois.

37. Pronouns, Etc. References to a Member or Manager shall be deemed to include all applicable genders, numbers, and entities.

38. Counterparts. This instrument may be executed in any number of counterparts each of which shall be considered an original.

39. Specific Performance. Members agree that injunctive relief may be appropriate to enforce the terms of this Arrangement.

40. Further Action. Each Member agrees to execute any documents necessary to carry out the provisions of this Arrangement.

41. Method of Notices. Notices shall be hand delivered or sent by registered or certified mail.

42. Facsimiles. Copies, facsimiles, or other reliable reproductions may be used in lieu of originals if confirmed received.

43. Computation of Time. In computing periods of time, certain days shall be excluded as provided in this Arrangement.

* * *

WHEREFORE, the Initial Member, being the single Member of this LLC, has executed this Arrangement on the day of , .

Signed:

Print Name:

Address:

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Definition and scope of the Illinois Single-Member Operating Arrangement

An Illinois Single-Member Operating Arrangement is a written operating agreement used by a single-member limited liability company (LLC) formed under Illinois law to document ownership, management, and the member’s rights and obligations. Although Illinois does not require an operating agreement to be filed with the Secretary of State, maintaining a written agreement clarifies governance, supports limited liability protection, and records capital contributions, profit allocation, and transfer restrictions. This document is typically used alongside Articles of Organization and federal tax registrations to establish the LLC’s internal rules and to provide evidence of separate entity status for banks, courts, and tax authorities.

Why a formal single-member arrangement matters in Illinois

A written operating arrangement provides clear evidence of the LLC’s separate legal existence, reduces personal liability risk, and sets rules for management, distributions, and transfer of membership. It is especially important for single-member LLCs to document corporate formalities to support limited liability and to guide tax classification and succession planning.

Why a formal single-member arrangement matters in Illinois

Core elements to include in a professional arrangement

A robust Illinois Single-Member Operating Arrangement covers governance, capital, distributions, tax treatment, transfers, and dispute resolution to minimize ambiguity and support enforceability.

Identification

Legal name of the LLC, formation state, and principal place of business; member legal name and address.

Formation Details

Reference to the Articles of Organization, date of formation, and whether the member is sole manager or appoints a manager.

Capital Contributions

Initial and future contribution requirements, capital accounts, and treatment of additional investments or loans.

Distributions

Allocation of profits and losses, timing of distributions, and priority rules for member draws or guarantees.

Transfers & Assignments

Restrictions on transfer, buyout provisions, right of first refusal, and admission of additional members.

Dissolution & Succession

Events triggering dissolution, winding-up procedures, and succession or assignment on member incapacity or death.

Step-by-step completion workflow

Complete the arrangement in the sequence below to ensure consistent information and to reduce rework.

  • 01
    Prepare documents: Gather Articles of Organization, EIN, and member identification.
  • 02
    Fill core fields: Enter LLC name, member name, effective date, and capital terms.
  • 03
    Review governance: Confirm management structure, voting (if any), and transfer rules.
  • 04
    Sign and retain: Execute signature(s), save copies, and store per retention rules.

Customizing and configuring an online completion workflow

When using an online e-form, configure fields, authentication, and routing before sending to ensure a smooth signing process.

Field Configuration
Effective Date Field Set required, MM/DD/YYYY format and auto-fill from template variables
Signature Blocks Add signature + date fields and require completion before submission
Authentication Enable email or SMS code verification; use stronger ID proofing if needed
Routing Set signing order and automatic distribution of final PDF to member and business records

Where to file, send, and store the executed arrangement

The operating arrangement is typically a private corporate record; these destinations are commonly used for execution, storage, and secondary filing where required.

  • Member Records: Keep an executed signed copy in the member’s official corporate records.
  • Company Folder: Store a PDF in the LLC’s secure document repository and backup systems.
  • Banking: Provide signed copy to banks when opening or maintaining business accounts.
  • Third-Party Requests: Share copies with lenders, investors, or purchasers under confidentiality terms.

Digital signing and e-submission considerations

Choose e-sign workflows and authentication that align with the document’s sensitivity and the parties’ consent.

  • Authentication: Email, SMS, KBA, or advanced signer ID based on risk
  • Audit Trail: Timestamp, IP, and action history preserved
  • File Formats: PDF and DOCX support for signed export

Common eSignature pricing and capability comparison for document execution

Comparison of typical commercial e-signature options for executing operating arrangements. signNow is placed first per vendor ordering rules.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial Varies by plan Varies by plan Yes, limited Yes, limited
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No

Information the arrangement should record

Member Name: Full legal name
LLC Name: Exact registered name
Registered Agent: Name and business address
EIN: Federal employer identification
Capital Details: Amounts and asset descriptions
Management: Member or manager designation

Consequences of incomplete or incorrect arrangements

Piercing Risk: Loss of liability protection
Tax Misclassification: Unintended tax treatment
Bank Refusal: Account or loan denial
Contract Disputes: Ambiguity harms enforceability
Transfer Issues: Blocked or contested transfers
Probate Exposure: Unclear succession for member interest

Common mistakes to avoid when preparing the arrangement

  • Failing to use the exact LLC name and Articles data, which causes bank, title, or contract rejections and administrative delays.
  • Omitting clear capital contribution and distribution rules, leaving the member vulnerable to liability or tax disputes.
  • Using vague transfer language without buyout mechanics, producing contested transfers or unintended admissions of new members.
  • Relying on unsigned or improperly executed templates that cannot be produced as reliable evidence in litigation or creditor claims.

Who has authority to sign and what that role means

Single Member

The sole owner signs as the controlling member. Their signature binds company actions unless the agreement reserves powers to a manager or third party.

Designated Manager

If the member appoints a manager, the manager executes operational documents per the agreement and should have written delegation authority.

Illustrative examples from document execution in practice

Real-world examples show how a clear operating arrangement reduces friction for banking, transactions, and succession.

Optica Ventures LLC

Brian Fitzgibbons, COO of Optica Ventures LLC, adopted a written arrangement to standardize transactions.

  • The interface supported remote execution.
  • "The interface is simple and easy-to-use for our team; more importantly, it is just as easy for our customers."

Fertility Centers of Illinois

John Butler, Founder of Fertility Centers of Illinois, used a signed arrangement to centralize governance and vendor contracting.

  • The signed copy resolved a banking documentation request.
  • "The airSlate SignNow team has been exceptional, responsive, the API has been great, and we're extremely happy that we chose airSlate SignNow as a company."

Key timing considerations and related deadlines

Timing matters for tax, banking, and operational readiness; align execution with other filings and registrations.

Effective Date:

Choose an execution date before operations or as stated in the agreement

EIN Before Hiring:

Obtain EIN from IRS before payroll or hiring to comply with tax rules

Banking Requests:

Provide executed agreement when opening business accounts; banks may require current copies

Annual Filings:

Meet any state annual report or franchise filing dates as required

Registered Agent Updates:

Update agent information promptly if changes occur

Frequently asked questions about Illinois single-member arrangements

Answers to common legal and procedural questions covering enforceability, signatures, and recordkeeping.


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