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LLC Operating Agreement

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Single-Member Operating Arrangement of Limited Liability Company
State of New Mexico

This Operating Arrangement is hereby established, this the day of , , by the Initial Member.

The Initial Member contemplates that additional Members may join the limited liability company in the future, and the following Operating Arrangement has therefore been developed.

ARTICLE I
FORMATION OF LIMITED LIABILITY COMPANY

1. Formation of LLC. The Initial Member has formed a limited liability company in the State of New Mexico named ("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

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.

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.

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

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.

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

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

24. LLC Interest. The LLC interest is personal property.

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 and first offer the interest to the LLC.

The purchase price shall be paid in cash at closing unless the total purchase price is in excess of $ in which event the purchase price shall be paid in ( ) equal quarterly installments.

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. Except as otherwise provided, 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 of all Members should additional Members be added.

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 that if additional Members are admitted, the LLC be taxed as a partnership.

ARTICLE XI
RECORDS AND INFORMATION

33. Records and Inspection. The LLC shall maintain at its place of business the Articles of Organization, any amendments thereto, this Arrangement, and all other LLC records required to be kept by applicable law.

34. Obtaining Additional Information. Each Member may obtain from the LLC information regarding the state of the business and financial condition of the LLC.

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 construed in accordance with and governed by the laws of the State of New Mexico.

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

39. Specific Performance. The non-breaching Members shall be entitled to injunctive relief to prevent breaches of this Arrangement.

41. Method of Notices. All written notices required or permitted by this Arrangement shall be hand delivered or sent by registered or certified mail.

43. Computation of Time. In computing any period of time under this Arrangement, the day of the act, event or default from which the designated period of time begins to run shall not be included.

* * *

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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What an LLC Operating Agreement Is and why it matters

An LLC Operating Agreement is a private contract among the members of a limited liability company that governs ownership, management, capital contributions, profit and loss allocation, voting rights, transfer restrictions, and procedures for adding or removing members. While most states do not require an operating agreement to form an LLC, the document establishes internal rules, reduces ambiguity, and preserves limited liability by demonstrating separation between the company and personal affairs. It can be customized for single-member or multi-member LLCs and often includes dissolution, dispute resolution, and tax election provisions.

Why a Written LLC Operating Agreement Strengthens Your Company

A clear LLC Operating Agreement defines member rights, reduces internal disputes, sets governance and financial rules, and strengthens the company's limited liability protection. Lenders, investors, and banks often request it to verify authority and ownership when opening accounts or making credit decisions.

Why a Written LLC Operating Agreement Strengthens Your Company

Who typically prepares and relies on an LLC Operating Agreement

Owners, managers, and advisors use LLC Operating Agreements to document governance, capital contributions, and decision-making.

  • Single-member owners who want written evidence of limited liability and internal rules.
  • Multi-member LLCs establishing profit allocation, voting, member duties, and transfer restrictions.
  • Banks, investors, and attorneys reviewing authority, ownership percentages, and dissolution terms.

Proper distribution and execution ensure predictable operations, clearer tax treatment, and evidentiary support for third parties reviewing the company.

Core provisions to include in an LLC Operating Agreement

Include clear provisions for ownership, management, capital contributions, profit allocation, voting, transfers, dissolution, and dispute resolution to avoid ambiguity and litigation.

Ownership

Specify member percentage interests, classes of membership, capital accounts, and rules for additional contributions or capital calls; define how ownership changes affect profit and voting rights.

Management

Identify whether the LLC is member-managed or manager-managed, list managers' duties, hiring authority, meeting protocols, and decision thresholds for routine and major actions.

Distributions

Document timing and priority of distributions, allocation of profits and losses among members, tax distributions for K-1 allocation, and procedures for withholding.

Transfer Rules

Set restrictions on transfers, right of first refusal, admission of new members, buy-sell triggers, valuation method, and approval thresholds for transfers.

Dissolution

Define events causing dissolution, wind-up procedures, creditor priority, asset distribution order, and steps to complete termination filings with the state.

Dispute Resolution

Require mediation or arbitration clauses, chosen venue and governing law, and processes for resolving deadlocks to limit time and litigation costs.

Essential information fields to collect

Entity Name: Legal LLC name as filed
Formation State: State where articles of organization were filed
Member Names: Full legal names of all members
Member Addresses: Street, city, state, ZIP for each member
Capital Contributions: Recorded cash or property contributions and dates
Tax Classification: Entity classification for federal tax purposes

Main legal and financial risks from an incomplete agreement

Loss of Protection: Personal liability exposure for members
Tax Missteps: Incorrect tax classification or missed elections
Banking Issues: Banks may refuse accounts without proof of authority
Disputes: Member disputes can trigger costly litigation
Valuation Disputes: Unclear transfer rules cause valuation conflicts
Regulatory Risk: Noncompliance in regulated industries

Common errors to avoid when preparing the agreement

  • Using a generic template without tailoring capital contributions, voting, and transfer provisions to your business context.
  • Failing to match member names and entity names exactly to state filings and government IDs.
  • Omitting amendment procedures or failing to document subsequent member approvals and capital calls.
  • Assuming verbal agreements override written provisions; undocumented practices create ambiguity at enforcement.

Step-by-step: draft, approve, sign, and store the agreement

Use this sequence to draft, agree, sign, and store an LLC Operating Agreement that documents governance and financial arrangements.

  • 01
    Draft: Record members, capital, and management structure
  • 02
    Review: Have all members and counsel review terms
  • 03
    Sign: Execute with signatures and dates from all parties
  • 04
    Store: Retain executed copy and distribute to members

How execution and distribution typically proceed

Typical routing for execution includes drafting, signature collection, notarization if required, and distributing final executed copies to stakeholders.

  • Prepare: Assemble draft and supporting exhibits
  • Assign Fields: Place signature, date, and initial fields
  • Collect Signatures: Signers authenticate and sign electronically or on paper
  • Distribute: Store originals and send executed copies to members

Digital workflow settings to consider when eSigning

Configure signer authentication, field types, routing order, and retention settings before sending for signature.

Field Configuration
Signer authentication Email, SMS code, knowledge-based options
Routing order Sequential or parallel signer flow
Required fields Signatures, dates, initials, and attachments
Audit trail Enable IP, timestamp, and action log

Platform capabilities to verify for eSigning and eSubmission

For eSigning and eSubmission, confirm platform integrations, file format support, and authentication options required by your jurisdiction or industry.

  • Integrations: Salesforce, NetSuite, Microsoft 365, Google Workspace
  • File formats: PDF, DOCX, HTML, Excel supported
  • Authentication: Email, SMS code, KBA, SSO options

Timing considerations tied to formation and tax choices

Several timing points affect when the agreement should be adopted and when related filings or elections must be completed.

Adopt at formation:

Execute the agreement when or immediately after filing articles

Before bank accounts:

Provide executed agreement to open business bank accounts

Tax election windows:

Complete entity tax elections within IRS-specified timeframes

Annual review:

Review terms annually or after material changes

Amend promptly:

Record and sign amendments when membership or capital changes occur

Key milestones from formation to long-term governance

Track these sequential milestones to ensure the Operating Agreement supports formation, operations, and eventual wind-down.

01

Formation and Filing

File articles of organization and adopt the initial operating agreement.

02

Initial Contributions

Record member capital contributions and confirm ownership percentages.

03

Tax Elections

Make any federal tax classification elections within required timeframes.

04

Annual Governance

Conduct annual reviews, update capital accounts, and record amendments.

eSignature vendor comparison for executing LLC Operating Agreements

Compare baseline pricing and common capabilities across eSignature vendors; signNow is listed first per comparison conventions.

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 Yes, 7-day trial Varies Varies Varies Varies
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No

Frequently asked questions about LLC Operating Agreements

Answers to common questions about formation timing, signatures, electronic execution, notarization, amendments, and tax treatment.


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