Free Illinois LLC Operating Agreement Template

Use our free template to create your own single-member LLC operating agreement. Just fill in your company information, save, and download your new operating agreement. Choose whether to start your Illinois LLC on your own or hire us to do it for you.

Starting a multi-member or manager-managed LLC? When you hire us, we’ll provide an operating agreement template customized for your LLC structure.

What Is an LLC Operating Agreement?

An LLC operating agreement is a legal document that governs the policies and structure of an LLC. Your operating agreement establishes how decisions will be made, how profits and losses will be distributed, and how you’ll respond to emergencies, among other matters. Be aware that your operating agreement is a legally binding contract between the members and managers of your LLC. It’s a good idea to consult an attorney before finalizing this document.

Operating agreements are internal documents, so you don’t need to file yours with the Illinois Secretary of State. But that doesn’t mean it’s not important. Your operating agreement provides a road map for your company, planning for how you’ll handle future situations. If you don’t have one, there’s more likely to be conflict and confusion down the line.

Does Illinois require an operating agreement for LLCs?

Illinois law states that an LLC “may enter into an operating agreement” but doesn’t require it (805 ILCS 180/15-5). That being said, if you don’t have an operating agreement, your LLC will be required to follow Illinois’ default LLC laws, which may not be the best fit for your company.

Why Is It Important to Have an Operating Agreement?

Since having an LLC operating agreement isn’t legally required in Illinois, you might be tempted to skip it. But there are many reasons taking the time to create a solid operating agreement is worth it:

1. Helping resolve disputes between members

Even when everyone has good intentions, misunderstandings can happen. Your operating agreement establishes how your company will handle common situations, so it’s a useful resource for settling disagreements.

2. Reinforcing your limited liability status

LLCs enjoy limited liability protection because they are considered legally separate from their owners. But this protection isn’t guaranteed. If your company is found to be mixing business and personal assets, a court could rule that you’ve “pierced the corporate veil,” and your LLC could lose its limited liability status. One way to prevent this is to have an operating agreement that clearly details how company finances are to be managed.

That being said, if your LLC doesn’t follow its operating agreement, just having the document won’t help you much. So make sure everyone in your LLC understands the operating agreement and agrees to its guidelines.

3. Overriding Illinois’ default LLC laws

Without an operating agreement, your LLC will be subject to Illinois’ default LLC laws. For example, Illinois law 805 ILCS 180/15-1 states that an LLC is member-managed unless the operating agreement states that it will be managed by outside managers. If you want to be able to customize the way your LLC is run, you’ll need an operating agreement.

4. Establishing your LLC’s credibility

Your operating agreement shows that you’re running your company by the book and can be trusted. Business partners, investors, and banks may want to review your operating agreement before agreeing to work with you or give you a loan.

What to Include in Your LLC Operating Agreement

Your operating agreement can include almost any provision you want, as long as it doesn’t contradict your Articles of Organization or Illinois law. That being said, every operating agreement should cover the following topics:

• Management structure. Whether your LLC will be managed by its owners (member-managed) or by outside managers (manager-managed).
• Member information. The names and addresses of all members should be listed.
• Initial contributions. The amount of money or other assets each member contributed.
• Voting rights and procedures. The voting process and the amount of voting power each member has.
• Transferring membership interest. How members can join or leave the LLC.
• Profits, losses, and distributions. How money will be managed and what each member is entitled to.
• Compensation. How members or managers will be paid or otherwise compensated for services to the company.
• Bookkeeping procedures. How records will be kept.
• Dissolution. The circumstances in which the company will dissolve, and how this will be handled.

Illinois statute 805 ILCS 180/15-5 lists provisions an operating agreement may not include. For example, your operating agreement can’t alter state law or the power of the courts.