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Pennsylvania LLC Operating Agreement

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LLC Sample Operating Agreement

PA-00LLC-1

This agreement is a sample operating agreement and should be modified to meet your needs. It provides for the LLC to be operated by one or more managers OR by the members. You will have to decide how you want your LLC to operate.

Read carefully and make appropriate changes to suit your individual needs and purposes.

OPERATING AGREEMENT

OF

AN PENNSYLVANIA LIMITED LIABILITY COMPANY

THIS OPERATING AGREEMENT ("Agreement") is entered into the day of , 20 , by and between the following persons:

1.

2.

3.

4.

hereinafter, ("Members" or “Parties”).

FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby acknowledged, the Parties covenant, contract and agree as follows:

ARTICLE I
FORMATION OF LIMITED LIABILITY COMPANY

1. Formation of LLC. The Parties have formed a Pennsylvania limited liability company named ("LLC"). The operation of the LLC shall be governed by the terms of this Agreement and the applicable laws of the State of Pennsylvania relating to the formation, operation and taxation of a LLC, specifically the provisions of the Pennsylvania Limited Liability Company Act (Pennsylvania Consolidated Statutes Annotated, Title 15, Chapter 89), hereinafter referred to as the "Act." To the extent permitted by the Act, the terms and provisions of this Agreement shall control if there is a conflict between such Act and this Agreement. The Parties intend that the LLC shall be taxed as a partnership. Any provisions of this Agreement, if any, that may cause the LLC not to be taxed as a partnership shall be inoperative.

2. Certificate of Organization. The Members acting through one of its Members, , filed Certificate of Organization, ("Certificate") for record in the office of the with the Pennsylvania Department of State, Corporation Bureau on , thereby creating the LLC.

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

a)

b) To conduct or promote any lawful businesses or purposes within Pennsylvania or any other jurisdiction which a limited liability company is legally allowed to conduct or promote.

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 . The Members may change the registered office and/or registered agent from time to time.

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

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

ARTICLE II
MEMBERS

7. Initial Members. The initial members of the LLC, their initial capital contributions, and their percentage interest in the LLC are:

Initial Members Percentage Interest in LLC Capital Contribution

8. Additional Members. New members may be admitted only upon the consent of a majority of the Members and upon compliance with the provisions of this agreement.

ARTICLE III
MANAGEMENT

9. Management. The Members have elected to manage the LLC as follows (check as appropriate):

The management of the LLC shall be vested in the Members without an appointed manager.

The Members hereby delegate the management of the LLC to Manager(s), subject to the limitations set out in this agreement.

g) There shall be initial Managers.

h) The initial Manager(s) is/are:

10. Officers and Relating Provisions. In the event the Members elect to manage the LLC, rather than appointing a manager, the Members shall appoint officers for the LLC and the following provisions shall apply:

(a) Officers. The officers of the LLC shall consist of a president, a treasurer and a secretary, or other officers or agents as may be elected and appointed by the Members.

(b) Election and Term of Office. The officers of the LLC shall be elected annually by the Members by a majority vote.

(c) Removal. Any officer or agent may be removed by a majority of the Members whenever they decide that the best interests of the Company would be served thereby.

(d) Vacancies. A vacancy may be filled by the Members for the unexpired portion of the term.

(e) President. The President shall be the chief executive officer of the LLC and shall preside at all meetings of the Members.

(f) The Treasurer. The Treasurer shall be the chief financial officer of the LLC.

(g) Secretary. The secretary shall keep the minutes of the Members meetings and perform other duties as assigned.

11. Member Only Powers. Notwithstanding any other provision of this Agreement, only a majority of the Members may: (a) sell or encumber (but not lease) any real estate owned by the LLC, or (b) incur debt, expend funds, or otherwise obligate the LLC if the debt, expenditure, or other obligation exceeds $.

ARTICLE IV
CONTRIBUTIONS, PROFITS, LOSSES, AND DISTRIBUTIONS

12. Interest of Members. Each Member shall own a percentage interest in the LLC based on contributions and that percentage interest shall control the Member’s share of the profits, losses, and distributions of the LLC.

13. Contributions. The initial contributions and initial percentage interest of the Members are as set out in this Agreement.

14. Additional Contributions. Only a majority of the Members of the LLC may call on the Members to make additional cash contributions as may be necessary to carry on the LLC's business.

15. Record of Contributions/Percentage Interests. This Agreement, any amendment(s) to this Agreement, and all Resolutions of the Members of the LLC shall constitute the record of the Members of the LLC and of their respective interest therein.

16. Profits and Losses. The profits and losses and all other tax attributes of the LLC shall be allocated among the Members on the basis of the Members' percentage interests in the LLC.

17. Distributions. Distributions of cash or other assets of the LLC shall be made in the total amounts and at the times as determined by a majority of the Members.

18. 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 under a method which takes into account the varying interests during the year.

ARTICLE V
VOTING; CONSENT TO ACTION

19. Voting by Members. Members shall be entitled to vote on all matters which provide for a vote of the Members in accordance with each Member’s percentage interest.

20. Majority Required. Except as otherwise provided and delegated to the Officers or Managers, a majority of the Members, based upon their percentage ownership, is required for any action.

21. Meetings - Written Consent. Action of the Members or Officers may be accomplished with or without a meeting. If a meeting is held, evidence of the action shall be by Minutes or Resolution reflecting the action of the Meeting, signed by a majority of the Members, or the President and Secretary.

22. Meetings. Meetings of the Members may be called by any Member owning 10% or more of the LLC, or, if Managers were selected, by any Manager of the LLC, or if Officers were elected, by any officer.

23. Majority Defined. As used throughout this agreement the term “Majority” of the Members shall mean a majority of the ownership interest of the LLC as determined by the records of the LLC on the date of the action.

ARTICLE VI
DUTIES AND LIMITATION OF LIABILITY MEMBERS, OFFICERS, AND PERSONS SERVING ON ADVISORY COMMITTEES; INDEMNIFICATION

24. Duties of Members: Limitation of Liability. The Members, Managers and officers shall perform their duties in good faith, in a manner they reasonably believe to be in the best interests of the LLC.

25. Members Have No Exclusive Duty to LLC. The Members shall not be required to participate in the LLC as their sole and exclusive business.

26. Protection of Members and Officers.

(a) As used herein, the term “Protected Party” refers to the Members and officers of the Company.

(b) Good faith reliance on the provisions of this Agreement and LLC records is permitted.

(c) The provisions of this Agreement are agreed by the parties hereto to replace such other duties and liabilities.

27. Indemnification and Insurance.

(a) Right to Indemnification.

(i) Any person who is or was a member or officer of the LLC and who is or may be a party to any civil action may be indemnified and held harmless by the LLC.

(ii) Any person who is or was a member or officer of the LLC and who is or may be a party to any criminal action may be indemnified and held harmless by the LLC.

(b) Advancement of Expenses. Expenses incurred by an indemnified person in defending any proceeding shall be paid in advance of the proceedings conclusion.

(c) Non-Exclusivity of Rights. The right to indemnification and payment of fees and expenses conferred in this section shall not be exclusive of any right which any person may have or hereafter acquire.

(d) Insurance. The Members may cause the LLC to purchase and maintain insurance for the LLC, for its Members and officers.

(e) Effect of Amendment. No amendment, repeal or modification of this Article shall adversely affect any rights hereunder with respect to any action or omission occurring prior to the date when such amendment, repeal or modification became effective.

ARTICLE VII
MEMBERS INTEREST TERMINATED

28. 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 provided notice of withdrawal to the LLC thirty (30) days 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 of competent jurisdiction 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) A Member, without the consent of a majority of the Members, engages in specified insolvency or bankruptcy events.

(g) If within one hundred twenty (120) days after commencement of such action the matter has not been dismissed and/or consented to by a majority of the members.

(h) If within ninety (90) days after appointment of a trustee, receiver, or liquidator, the appointment is not vacated and/or consented to by a majority of the members.

(i) Any of the events provided in applicable code provisions that are not inconsistent with the dissociation events identified above.

29. 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 VIII
RESTRICTIONS ON TRANSFERABILITY OF LLC INTEREST;
SET PRICE FOR LLC INTEREST

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

31. Encumbrance. A Member can encumber his LLC interest by a security interest or other form of collateral only with the consent of a majority of the other Members.

32. 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.

Purchase price limit: $ payable 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 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) The selling Member must close on the assignment within ninety (90) days.

(e) A non-member purchaser cannot exercise any rights of a Member unless a majority of the non-selling Members consent.

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

ARTICLE IX
OBLIGATION TO SELL ON A DISSOCIATION
EVENT CONCERNING A MEMBER

34. 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 X
DISSOLUTION

35. Termination of LLC. The LLC will be dissolved and its affairs must be wound up only upon the written consent of a majority of the Members.

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

ARTICLE XI
TAX MATTERS

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

38. Partnership Election. The Members elect that the LLC be taxed as a partnership and not as an association taxable as a corporation.

ARTICLE XII
RECORDS AND INFORMATION

39. Records and Inspection. The LLC shall maintain at its place of business the Certificate of Organization, any amendments thereto, this Agreement, and all other LLC records required to be kept by the Act.

40. Obtaining Additional Information. Each Member may obtain from the LLC reasonable information regarding the state of the business and financial condition of the LLC and tax returns.

ARTICLE XIII
MISCELLANEOUS PROVISIONS

41. Amendment. Any amendment to this Agreement may be proposed by a Member and approved in writing by a majority of the Members.

42. Applicable Law. To the extent permitted by law, this Agreement shall be construed in accordance with and governed by the laws of the State of Pennsylvania.

43. Pronouns, Etc. References to a Member or Manager shall be deemed to include masculine, feminine, singular, plural, individuals, partnerships or corporations where applicable.

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

45. Specific Performance. Each Member agrees that the other Members shall be entitled to injunctive relief to prevent breaches of this Agreement.

46. Further Action. Each Member, upon the request of the LLC, agrees to perform all further acts and to execute, acknowledge and deliver any documents necessary to carry out the provisions of this Agreement.

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

48. Facsimiles. Copies, facsimiles, telecommunication or other reliable reproduction of a writing, transmission or signature may be used in lieu of the original.

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

WHEREFORE, the Parties have executed this Agreement on the dates stated below their signatures on the attached signature page for each individual Party.

NOTICE: EACH MEMBER HEREBY CERTIFIES THAT HE OR SHE HAS RECEIVED A COPY OF THIS OPERATING AGREEMENT AND FORMATION DOCUMENT OF , A PENNSYLVANIA LIMITED LIABILITY COMPANY. EACH MEMBER REALIZES THAT AN INVESTMENT IN THIS COMPANY IS SPECULATIVE AND INVOLVES SUBSTANTIAL RISK.

Members:

Print Name of Member:

Address:

City, State, Zip:

Phone:

Print Name of Member:

Address:

City, State, Zip:

Phone:

Print Name of Member:

Address:

City, State, Zip:

Phone:

Print Name of Member:

Address:

City, State, Zip:

Phone:

Print Name of Member:

Address:

City, State, Zip:

Phone:

Print Name of Member:

Address:

City, State, Zip:

Phone:

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What a Pennsylvania LLC Operating Agreement Does

A Pennsylvania LLC Operating Agreement is an internal written contract that defines the LLC’s structure, member roles, management approach, capital contributions, profit and loss allocation, and procedures for transfers, dissolution, and dispute resolution. Although Pennsylvania does not require filing the operating agreement with the Department of State, the document governs relations among members and between members and the LLC, can alter default statutory rules, and provides evidence of ownership and agreed governance to banks, investors, and tax authorities.

Why having a written operating agreement matters

A clear operating agreement reduces ambiguity, preserves limited liability, defines tax treatment and voting rules, and establishes procedures for member changes and dispute resolution, providing predictable governance and documentary proof of agreed terms.

Why having a written operating agreement matters

Who typically prepares and signs this agreement

The Pennsylvania LLC Operating Agreement is used by different participants at formation and as the business evolves.

  • Single-member owners who want to document corporate formality and tax classification decisions.
  • Multi-member groups establishing management voting, capital contributions, and distribution rules to prevent disputes.
  • Lenders, investors, or outside advisors who require clear ownership and transfer provisions before funding.

Parties should ensure copies are distributed to all members and retained in corporate records for future reference.

Primary signer roles

Managing Member

Typically prepares or reviews the agreement, documents management authority and fiduciary duties, and signs on behalf of the LLC when management is member-run. Ensures internal procedures and bank account signatories align with the agreement's terms.

Company Attorney

Often drafts or reviews the operating agreement, explains tax and liability consequences, confirms compliance with Pennsylvania law, and recommends clauses for investor protections, buy-sell terms, and dispute resolution mechanisms.

Essential information to include

LLC Name: Exact legal entity name.
Effective Date: MM/DD/YYYY effective date.
Principal Office: Street, city, state, ZIP.
Member List: Full names and ownership percentages.
Capital Contributions: Cash or property amounts.
Governing Law: State law selected for disputes.

Consequences of an incomplete agreement

Piercing Liability: Risk to limited liability shield.
Tax Misclassification: Unclear tax status or penalties.
Member Disputes: Unresolved voting and control issues.
Transfer Problems: Unclear rules for selling interests.
Banking Delays: Account opening may be blocked.
Regulatory Penalties: Fines for omitted filings.

Common preparation errors to avoid

  • Using a generic template without tailoring capital contributions, voting percentages, and distribution mechanics to the members’ actual agreement.
  • Failing to specify management authority and decision thresholds, which often causes deadlocks when members disagree on major actions.
  • Omitting buy-sell, admission, or withdrawal procedures, leaving successors and exiting members’ rights unresolved and subject to dispute.
  • Neglecting to reconcile the operating agreement with the Certificate of Organization, resulting in inconsistent public and private records.

How businesses use operating agreements

Real-world examples show why tailored operating agreements matter and how eSignature tools speed execution for Pennsylvania LLCs.

Optica Ventures LLC

When forming a multi-member investment LLC they documented member percentages and voting rules.

  • They used an online signer workflow to collect signatures quickly.
  • The signed operating agreement provided clear ownership evidence for investor due diligence and bank account setup.

Martin Properties

A small real estate firm used an operating agreement to define cash distributions and property management duties.

  • The team executed amendments when new properties were added.
  • Accurate, signed records simplified rental income allocations and lender review during refinancing.

Step-by-step: completing the operating agreement

Follow these sequential steps to draft, review, sign, and store a Pennsylvania LLC Operating Agreement correctly.

  • 01
    Draft Terms: Define members, contributions, management, and distributions.
  • 02
    Review Legal: Have counsel check tax and liability provisions.
  • 03
    Collect Signatures: Obtain signatures from all members.
  • 04
    Retain Records: Store executed copies with corporate records.

Typical eSigning workflow for an agreement

A standard electronic signing flow speeds execution while preserving an audit trail and legal validity under U.S. law.

  • Upload Document: Prepare the operating agreement file (PDF/DOCX).
  • Place Fields: Add signature, date, and initial fields.
  • Authenticate: Choose signer verification method (email/SMS/KBA).
  • Complete Audit: System records IP, timestamp, and actions.

Configuring a secure signing workflow

Set signer identity, field rules, and retention before sending the agreement for signature.

Field Configuration
Signature Field Require signer and date fields for each member
Authentication Email plus SMS code or KBA for higher assurance
Order Set sequential or parallel signing order
Retention Enable PDF export and audit trail storage

Core provisions to include in a professional agreement

A complete operating agreement covers membership, governance, capital, distributions, transfer restrictions, and dispute processes to reduce future uncertainty.

Formation Details

State the LLC name, effective date, and principal place of business, and confirm conformity with the Certificate of Organization.

Membership

List members, ownership percentages, capital contributions, and procedures for admitting new members or assigning interests.

Management

Specify whether the LLC is member-managed or manager-managed and define managers’ powers, duties, and voting thresholds.

Distributions

Describe how profits and losses are allocated and the timing and priority of distributions among members.

Transfers

Set transfer restrictions, rights of first refusal, buyout formulas, and procedures for voluntary or involuntary transfers.

Dispute Resolution

Include mediation, arbitration, venue selection, and choice-of-law clauses to streamline conflict resolution.

Practical drafting tips for clarity and enforceability

Adopt clear language, measurable formulas, and consistent definitions to reduce disagreements and ease administration.

Use Defined Terms
Define capitalized terms centrally (e.g., "Capital Contribution," "Member," "Manager") and use them consistently throughout the document to avoid interpretive disputes and drafting ambiguities.
Be Specific About Money
Specify exact contribution amounts, distribution waterfalls, and timing for payments rather than vague phrases; include mechanisms for capital calls and remedies for nonpayment.
Address Tax Classification
State the intended federal tax classification (disregarded entity, partnership, or corporation), and include provisions allocating tax items and indemnifying members for tax liabilities when necessary.
Plan for Exit Events
Include buy-sell triggers, valuation methods, and cash-out procedures for member death, disability, bankruptcy, or withdrawal to prevent prolonged operational disruption.

eSignature vendor comparison for executing agreements

Compare common plan and feature differences relevant to signing Pennsylvania LLC Operating Agreements. Pricing reflects typical per-user annual billing options.

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 trial No No 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

Technical formats and integrations to support execution

Ensure the eSignature platform accepts your document format and integrates with record systems for storage and auditability.

  • Supported Formats: PDF, DOCX, HTML, Excel
  • Common Integrations: Salesforce, NetSuite, Google Workspace
  • Security Standards: AES-256 at rest; TLS 1.2/1.3 in transit

Frequently asked questions about Pennsylvania LLC operating agreements

Answers to common questions about execution, eSign validity, amendments, and recordkeeping for Pennsylvania LLC Operating Agreements.


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Timing and review checkpoints for the agreement

Key timing considerations help ensure the operating agreement aligns with formation steps, tax elections, and ownership changes.

Sign at formation:

Execute upon or immediately after filing the Certificate of Organization.

Tax elections:

Make entity tax elections (e.g., partnership or corporation) promptly; tax treatment affects allocations.

Ownership changes:

Amend agreement when ownership or capital contributions change.

Annual review:

Review provisions annually or when business circumstances change.

Record retention:

Store executed documents according to retention timelines and legal obligations.

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