OPERATING AGREEMENT OF [[LLC NAME]], LLC
(Indiana Limited Liability Company)
This Operating Agreement (this "Agreement") of [[LLC Name]], LLC (the "Company"), an Indiana limited liability company, is entered into as of [[Effective Date]] by and among the persons listed on Exhibit A attached hereto (each a "Member" and collectively the "Members").
ARTICLE 1 - ORGANIZATION
1.1 Formation. The Company was formed as an Indiana limited liability company by filing Articles of Organization with the Indiana Secretary of State on [[Date of Filing]], pursuant to the Indiana Business Flexibility Act (the "Indiana LLC Act"), Indiana Code § 23-18-1-1 et seq.
1.2 Name. The name of the Company is [[LLC Name]], LLC.
1.3 Principal Office. The principal office of the Company is located at [[Principal Office Address, City, Indiana, ZIP]]. The Company may change its principal office by resolution of the Members.
1.4 Registered Agent and Registered Office. The Company's registered agent is [[Registered Agent Name]], located at [[Registered Agent Address, City, Indiana, ZIP]], as set forth in the Company's Articles of Organization. The Company shall at all times maintain a registered agent and registered office in Indiana as required by I.C. § 23-18-12-1.
1.5 Term. The Company shall exist perpetually unless dissolved pursuant to Article 14 of this Agreement or as otherwise required by law.
1.6 Purposes. The Company is organized to engage in any lawful activity for which a limited liability company may be formed under the Indiana LLC Act, including specifically: [[Primary Business Purpose, e.g., "the operation of a software development and consulting business"]]; and all activities incidental or related thereto.
1.7 No State-Law Defaults That Conflict with This Agreement. This Agreement is intended to govern the affairs of the Company to the fullest extent permitted by I.C. § 23-18-4-1. To the extent any provision of the Indiana LLC Act sets a default rule that differs from this Agreement, this Agreement shall control, except where the Act expressly prohibits modification by agreement.
ARTICLE 2 - MEMBERS; MEMBERSHIP INTERESTS
2.1 Members. The Members, their addresses, and their initial Capital Contributions and Membership Interests (expressed as percentage interests or units) are set forth on Exhibit A.
2.2 Membership Interest. Each Member's "Membership Interest" consists of: (a) the Member's right to receive distributions of the Company's cash and assets; (b) the Member's right to vote and participate in management as provided herein; and (c) the Member's economic interest in the Company.
2.3 Additional Members. New Members may be admitted only upon: (a) the approval of Members holding a majority (or [[super-majority: e.g., 75%]]) of the outstanding Membership Interests; and (b) execution of an amendment to this Agreement and Exhibit A; and (c) payment of the Capital Contribution specified by the Members.
2.4 Liability of Members. No Member shall be personally liable for any debt, obligation, or liability of the Company solely by reason of being a Member. (I.C. § 23-18-3-3.)
ARTICLE 3 - CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS
3.1 Initial Capital Contributions. Each Member has contributed (or agrees to contribute) to the capital of the Company the amount or property described on Exhibit A (the "Initial Capital Contribution").
3.2 No Additional Contributions Required. Except as otherwise provided in this Agreement or unanimously agreed by the Members, no Member is required to make any additional Capital Contribution.
3.3 Voluntary Additional Contributions. A Member may make additional Capital Contributions with the approval of [[a majority / all]] of the Members. Exhibit A shall be updated to reflect any additional Capital Contributions.
3.4 Capital Accounts. The Company shall maintain a separate Capital Account for each Member. Each Member's Capital Account shall be:
(a) Credited with: (i) the Member's Capital Contributions (at fair market value, reduced by liabilities assumed by the Company or to which the contributed property is subject); (ii) the Member's allocable share of Company Net Income and gain; and (iii) the Member's share of income exempt from tax.
(b) Debited with: (i) the amount of cash and fair market value of any property distributed to the Member (reduced by liabilities assumed by the Member); (ii) the Member's allocable share of Company Net Loss and deduction; and (iii) the Member's share of expenditures not deductible by the Company in computing taxable income and not properly chargeable to capital account.
3.5 Capital Account Maintenance. Capital Accounts shall be maintained in accordance with Treasury Regulation § 1.704-1(b)(2)(iv). The Company shall make any adjustments required by Treas. Reg. §§ 1.704-1(b) and 1.704-2 to maintain Capital Accounts on a "book" basis consistent with tax purposes (including revaluations of Company property upon the occurrence of a revaluation event under Treas. Reg. § 1.704-1(b)(2)(iv)(f)).
3.6 No Right to Return of Capital. Except as otherwise expressly provided in this Agreement, no Member shall have any right to demand or receive the return of the Member's Capital Contribution prior to the dissolution and winding up of the Company.
3.7 No Interest on Capital. Unless otherwise unanimously agreed, no Member shall be entitled to receive interest on the Member's Capital Account or Capital Contribution.
ARTICLE 4 - ALLOCATIONS OF NET INCOME AND NET LOSS
4.1 General Allocation. Net Income and Net Loss for each fiscal year shall be allocated among the Members in proportion to their respective Membership Interests as set forth on Exhibit A, subject to the special allocation provisions of this Article 4.
4.2 Special Allocations - Minimum Gain Chargeback. If there is a net decrease in Company Minimum Gain (as defined in Treas. Reg. § 1.704-2(d)) during any Company fiscal year, each Member shall be specially allocated items of Company income and gain for such year (and, if necessary, subsequent years) in an amount equal to each Member's share of the net decrease in Company Minimum Gain. (Treas. Reg. § 1.704-2(f).)
4.3 Special Allocations - Member Minimum Gain Chargeback. If there is a net decrease in Member Nonrecourse Debt Minimum Gain during any Company fiscal year, each Member who has a share of such minimum gain shall be specially allocated items of Company income and gain in an amount equal to such Member's share of the net decrease. (Treas. Reg. § 1.704-2(i)(4).)
4.4 Qualified Income Offset. If any Member unexpectedly receives any adjustment, allocation, or distribution described in Treas. Reg. § 1.704-1(b)(2)(ii)(d)(4), (5), or (6) that creates or increases a deficit balance in the Member's Capital Account, such Member shall be allocated items of Company income and gain in an amount and manner sufficient to eliminate such deficit as quickly as possible. (Treas. Reg. § 1.704-1(b)(2)(ii)(d) - Qualified Income Offset.)
4.5 Code § 704(c) Allocations. In accordance with I.R.C. § 704(c) and Treas. Reg. § 1.704-3, income, gain, loss, and deduction with respect to any property contributed to the Company shall, solely for tax purposes, be allocated among the Members so as to take into account any variation between the adjusted tax basis of such property and its book value at the time of contribution, using the [[traditional / traditional with curative allocations / remedial allocation method (select)]] method.
4.6 Tax Allocations Tied to Book Allocations. Except as otherwise provided in Section 4.2 through 4.5, tax allocations shall follow book allocations.
4.7 Limitation on Loss Allocations. No Net Loss shall be allocated to any Member to the extent it would cause or increase a deficit balance in such Member's Capital Account (as adjusted for all items described in Treas. Reg. § 1.704-1(b)(2)(ii)(d)) beyond such Member's share of Company Minimum Gain.
ARTICLE 5 - DISTRIBUTIONS
5.1 Distributions. Distributions of available cash flow shall be made at such times and in such amounts as determined by [[the Members by majority vote / the Manager(s) in their sole discretion / quarterly / annually]], subject to any restrictions under the Indiana LLC Act and this Agreement.
5.2 Order of Distribution. Distributions shall be made to the Members in proportion to their Membership Interests, as set forth on Exhibit A.
5.3 Tax Distributions. (Optional - include if partnership/S-corp tax treatment.) To assist Members in paying income taxes on their allocable shares of Company income, the Company may (but is not obligated to) make quarterly tax distributions in an amount equal to [[e.g., 40%]] of each Member's allocable Net Income for the fiscal year, distributed pro rata in proportion to each Member's Membership Interest.
5.4 Limitation on Distributions. No distribution shall be made to a Member if, after giving effect to the distribution, the Company would be unable to pay its debts and other obligations as they become due in the ordinary course of business. (I.C. § 23-18-5-5.)
5.5 No Return of Distributions. No Member shall be required to return any distribution received from the Company unless such distribution was unlawful under I.C. § 23-18-5-5 or is required to be returned by a court of competent jurisdiction.
ARTICLE 6 - MANAGEMENT
6.1 Management Structure - Select One:
- [ ] Member-Managed. The Company shall be managed by its Members. Except as otherwise provided in this Agreement, all decisions of the Company shall be made by Members holding a majority of the Membership Interests. Each Member has the authority to bind the Company in the ordinary course of business. (I.C. § 23-18-4-1.)
- [X] Manager-Managed. The Company shall be managed by one or more Managers. A Manager need not be a Member.
6.2 Appointment of Manager(s). (If Manager-Managed.) The initial Manager(s) of the Company is/are:
| Manager Name | Title | Address |
|---|---|---|
| [[Manager 1 Full Name]] | [[Managing Member / CEO / President]] | [[Address]] |
| [[Manager 2 Full Name (if any)]] | [[Title]] | [[Address]] |
Managers shall serve until their resignation, removal, or death. A Manager may be removed by Members holding a [[majority / two-thirds / 75%]] of Membership Interests, with or without cause.
6.3 Manager Authority. Each Manager has the authority to:
(a) Execute contracts and agreements in the ordinary course of business;
(b) Open and manage bank and investment accounts;
(c) Hire, supervise, and terminate employees and independent contractors;
(d) Incur liabilities and obligations not exceeding $[[Threshold, e.g., "$25,000"]] per transaction without Member approval; and
(e) Take all other actions necessary or appropriate to carry out the purposes of the Company.
6.4 Actions Requiring Member Approval. The following actions require approval of Members holding at least [[majority / two-thirds / 75%]] of Membership Interests:
(a) Amendment of this Agreement or the Articles of Organization;
(b) Sale or other disposition of all or substantially all of the Company's assets;
(c) Merger, consolidation, or conversion of the Company;
(d) Incurrence of debt or liabilities exceeding $[[Major Threshold, e.g., "$100,000"]];
(e) Admission of new Members;
(f) Dissolution or winding up of the Company;
(g) Any transaction between the Company and a Member or Manager or their affiliates;
(h) Any capital expenditure exceeding $[[Capital Expenditure Threshold]]; and
(i) Making, amending, or revoking any tax election that would affect all Members.
6.5 Meetings of Members.
(a) Annual Meeting. The Members shall hold an annual meeting at a time and place (or via teleconference/video conference) determined by the Manager(s) or a majority of Members.
(b) Special Meetings. Special meetings may be called by any Manager or by Members holding at least [[25%]] of Membership Interests on at least [[5]] days' written notice.
(c) Quorum. The presence (in person or by proxy) of Members holding at least [[majority]] of the Membership Interests shall constitute a quorum.
(d) Action by Written Consent. Any action that may be taken at a meeting of Members may be taken by written consent (including email if all Members consent to email as a valid means of consent) signed by Members holding not less than the minimum percentage of Membership Interests necessary to authorize the action at a meeting. (I.C. § 23-18-4-3.)
ARTICLE 7 - DUTIES; CONFLICTS OF INTEREST
7.1 Duty of Care and Loyalty. Each Manager (and Member in a Member-Managed company) owes the Company and the other Members a duty of care and a duty of loyalty as provided by Indiana Code § 23-18-4-5 (as applicable), including the obligation to account to the Company for and hold as trustee any benefit or profit derived from conduct in connection with Company business or from a use of Company property.
7.2 Conflicts of Interest. A Manager or Member who has a conflict of interest with respect to any transaction or matter shall disclose the conflict to the other Members promptly and shall abstain from voting on the matter. A transaction in which a Manager or Member has an interest is not voidable solely on that basis if it is disclosed and approved by disinterested Members holding a majority of the Membership Interests, or if it is fair to the Company.
7.3 Indemnification. The Company shall indemnify each Manager and Member against any claim, liability, or expense (including attorneys' fees) arising out of any act or omission taken in good faith on behalf of the Company in a manner reasonably believed to be within the scope of authority granted to such person, except for acts constituting fraud, willful misconduct, or gross negligence. (I.C. § 23-18-4-4.)
ARTICLE 8 - BOOKS AND RECORDS; FINANCIAL STATEMENTS
8.1 Books and Records. The Company shall maintain complete and accurate books and records at its principal office (or such other location as determined by the Manager). Each Member has the right to inspect and copy Company records upon reasonable written notice. (I.C. § 23-18-4-7.)
8.2 Fiscal Year. The fiscal year of the Company shall be the calendar year (January 1 - December 31), unless otherwise determined by the Members.
8.3 Financial Statements. The Company shall prepare annual financial statements, including a balance sheet, income statement, and statement of cash flows, within [[90]] days after the close of each fiscal year, and shall provide copies to all Members.
8.4 Banking. The Company shall maintain one or more bank accounts in the Company's name. Withdrawals from Company accounts shall require the signature of [[one / two (select)]] authorized Manager(s) or Member(s).
ARTICLE 9 - TAX MATTERS
9.1 Tax Classification. The Company is intended to be classified as a [[partnership (default for multi-member LLC) / disregarded entity (default for single-member LLC) / S corporation (by election under I.R.C. § 1361) / C corporation (by election under Treas. Reg. § 301.7701-3)]] for federal income tax purposes.
9.2 Tax Returns. The Company shall prepare and timely file all required federal, state, and local tax returns. Copies shall be provided to each Member within [[30]] days after filing.
9.3 Tax Matters Representative. [[Manager Name / Member Name]] is hereby designated as the Tax Matters Representative (the "TMR") for purposes of the Bipartisan Budget Act of 2015 (BBA) partnership audit rules, I.R.C. § 6221 et seq. The TMR shall have authority to make all elections and decisions in connection with any partnership audit or proceeding, provided that the TMR shall consult with the Members before making any election or settlement that would result in tax liability to the Members, to the extent reasonably practicable. (I.R.C. § 6223.)
9.4 Indiana Annual Report. The Company shall file its annual report with the Indiana Secretary of State as required by I.C. § 23-18-12-2, along with the applicable fee.
ARTICLE 10 - TRANSFER RESTRICTIONS; RIGHT OF FIRST REFUSAL
10.1 Restrictions on Transfer. No Member may sell, assign, pledge, hypothecate, or otherwise transfer (collectively, "Transfer") all or any portion of the Member's Membership Interest without: (a) the prior written approval of Members holding a [[majority / two-thirds / 75%]] of the outstanding Membership Interests (excluding the transferring Member); and (b) compliance with this Article 10.
10.2 Right of First Refusal (ROFR). If a Member (the "Selling Member") desires to Transfer any part of the Member's Membership Interest to a third party and has received a bona fide written offer from a third party (the "Third-Party Offer"), the Selling Member shall:
(a) Provide written notice to the other Members and the Company (collectively, the "ROFR Holders"), including a copy of the Third-Party Offer;
(b) Each ROFR Holder shall have [[30]] days after receipt of notice to elect to purchase the offered Membership Interest at the price and terms set forth in the Third-Party Offer (pro rata among electing ROFR Holders, unless otherwise agreed);
(c) If the ROFR Holders do not elect to purchase the full offered interest, the Selling Member may complete the Transfer to the third party at the price and on the terms in the Third-Party Offer within [[90]] days thereafter, provided such third-party purchaser executes a joinder to this Agreement.
10.3 Permitted Transfers. A Member may Transfer a Membership Interest without ROFR to: (a) a trust for the sole benefit of the Member or the Member's spouse or descendants; (b) a wholly owned entity of the Member; or (c) another existing Member. Such transferee must execute a joinder to this Agreement.
10.4 Involuntary Transfer. Any involuntary Transfer (including by operation of law, bankruptcy, divorce, or judgment) shall not give the transferee any management rights; the transferee shall only receive the economic interest of the Member. The remaining Members shall have a [[60]]-day right to purchase such interest at fair market value (as determined by appraisal if not agreed upon) from the trustee, receiver, or other person holding the interest.
10.5 Drag-Along Right. If Members holding at least [[two-thirds / 75%]] of the Membership Interests approve a sale of the Company (a "Company Sale") to a third party, such Members may require the remaining Members to Transfer their interests on the same terms and conditions as the approving Members.
10.6 Tag-Along Right. If a Member or group of Members proposes to sell Membership Interests representing more than [[25%]] of the total Membership Interests to a third party, each other Member shall have the right to participate pro rata in such sale on the same terms and conditions.
ARTICLE 11 - DISSOCIATION OF A MEMBER
11.1 Events of Dissociation. A Member is dissociated upon: (a) the Member's resignation or written withdrawal; (b) the Member's death; (c) the Member's legal incapacity or incompetency; (d) dissolution of a Member entity; (e) bankruptcy or insolvency of the Member; or (f) as otherwise provided by the Indiana LLC Act (I.C. § 23-18-6-4 et seq.).
11.2 Purchase of Dissociated Member's Interest. Upon a Member's dissociation (other than by Transfer under Article 10), the Company shall have the option ([[and/or the remaining Members shall have the option]]) to purchase the dissociated Member's Membership Interest at Fair Market Value within [[90]] days of dissociation.
11.3 Fair Market Value. "Fair Market Value" means the value determined by mutual agreement of the parties, or if no agreement is reached within [[30]] days, by an independent appraiser selected by agreement of the parties (or, failing agreement, each party selects one appraiser and the two appraisers select a third, whose determination is binding).
11.4 Buy-Sell Trigger - Deadlock. If the Members reach an impasse on a material business decision that cannot be resolved within [[60]] days (a "Deadlock"), any Member may trigger a buy-sell procedure: the triggering Member shall submit a written notice specifying a price per unit; the non-triggering Member(s) shall have [[30]] days to elect to either (i) purchase the triggering Member's interest at the stated price, or (ii) sell the non-triggering Member's interest to the triggering Member at the same price (a "Texas Shoot-Out").
ARTICLE 12 - ANTI-PIERCING / SEPARATENESS COVENANTS
To preserve the limited liability protection afforded by the Indiana LLC Act, the Company and each Member covenant to:
(a) Maintain books and records separate from those of any Member or affiliate;
(b) Maintain separate bank accounts in the Company's name and not commingle Company funds with funds of any Member or affiliate;
(c) Hold itself out as a separate entity distinct from any Member or affiliate;
(d) Observe all required formalities (annual reports, maintenance of registered agent, etc.);
(e) Pay its own obligations from its own funds; and
(f) Not represent to any third party that a Member is personally liable for Company obligations.
ARTICLE 13 - REPRESENTATIONS AND WARRANTIES OF MEMBERS
Each Member represents and warrants to the Company and the other Members that:
(a) The Member has full legal capacity and authority to enter into this Agreement;
(b) The Member's entry into this Agreement does not violate any other agreement or obligation of the Member;
(c) The Member's Membership Interest is being acquired for investment purposes and not for resale or distribution;
(d) The Member understands that Membership Interests have not been registered under the Securities Act of 1933 and that there are significant restrictions on Transfer; and
(e) The Member has had an opportunity to consult with legal counsel of the Member's choosing.
ARTICLE 14 - DISSOLUTION AND WINDING UP
14.1 Events of Dissolution. The Company shall dissolve upon: (a) approval of dissolution by Members holding [[two-thirds]] of the Membership Interests; (b) the occurrence of any event specified in the Articles of Organization as causing dissolution; or (c) entry of a judicial decree of dissolution under I.C. § 23-18-9-1 et seq.
14.2 Winding Up. Upon dissolution, the Company shall wind up its affairs. The Manager(s) (or, if none, a liquidating trustee appointed by the Members) shall: (a) complete unfinished business; (b) liquidate Company assets; (c) pay or provide for all debts and obligations of the Company; and (d) distribute any remaining assets to Members as provided in Section 14.3.
14.3 Distribution on Liquidation. After payment of all Company debts, the remaining assets shall be distributed in the following order:
(i) First, to Members in respect of any positive balance in their Capital Accounts (after all allocations under Article 4 have been made for the final fiscal year, including any gain or loss on liquidation); and
(ii) Second, to Members in proportion to their Membership Interests.
14.4 Certificate of Dissolution. Upon completion of winding up, the Company shall file a Certificate of Dissolution (or equivalent) with the Indiana Secretary of State as required by I.C. § 23-18-9-4 et seq.
ARTICLE 15 - MISCELLANEOUS
15.1 Entire Agreement. This Agreement (together with all Exhibits) constitutes the entire agreement among the Members with respect to the affairs of the Company and supersedes all prior agreements and understandings.
15.2 Amendment. This Agreement may be amended only by a written instrument signed by Members holding at least [[two-thirds / 75% / all]] of the Membership Interests.
15.3 Governing Law. This Agreement is governed by the laws of the State of Indiana, including the Indiana Business Flexibility Act, I.C. § 23-18-1-1 et seq. Any dispute shall be resolved in the courts of [[County]] County, Indiana.
15.4 Dispute Resolution. Prior to filing any lawsuit, the parties shall attempt to resolve disputes by: (a) direct negotiation for [[30]] days; and (b) mediation for [[30]] days if direct negotiation fails. The cost of mediation shall be shared equally. If mediation fails, either party may pursue litigation or arbitration as provided herein.
15.5 Electronic Signatures. This Agreement may be executed by electronic signature, which shall be deemed as effective as an original signature. (I.C. § 26-2-8-104, Indiana Uniform Electronic Transactions Act.)
15.6 Severability. If any provision is held invalid or unenforceable, the remaining provisions shall continue in full force and effect.
15.7 Notices. All notices shall be in writing and delivered by personal delivery, overnight courier, certified mail, or email to the addresses set forth in Exhibit A. Notice is effective upon receipt.
15.8 Counterparts. This Agreement may be signed in counterparts, each of which is an original, and all counterparts together constitute one instrument.
EXHIBIT A - MEMBERS, CAPITAL CONTRIBUTIONS, AND MEMBERSHIP INTERESTS
(As of [[Effective Date]])
| Member Name | Address | Capital Contribution | Membership Interest (%) |
|---|---|---|---|
| [[Member 1 Full Name]] | [[Address]] | $[[Amount]] | [[%]] |
| [[Member 2 Full Name]] | [[Address]] | $[[Amount]] | [[%]] |
| [[Member 3 (if any)]] | [[Address]] | $[[Amount]] | [[%]] |
| TOTAL | | $[[Total Capital]] | 100% |
EXHIBIT B - INITIAL MANAGER(S)
| Manager Name | Title | Start Date |
|---|---|---|
| [[Manager 1 Name]] | [[Title]] | [[Date]] |
SIGNATURES
By signing below, each person confirms that he/she/it has read this Operating Agreement, understands its terms, and agrees to be bound by all provisions hereof.
Member 1: [[Member 1 Full Name]]
Signature: ________________________ Date: ___________
Member 2: [[Member 2 Full Name]]
Signature: ________________________ Date: ___________
Manager (if not a Member): [[Manager Full Name]] (if applicable)
Signature: ________________________ Date: ___________
SOURCES AND DISCLAIMER
Governing Statutes: Indiana Business Flexibility Act, Indiana Code § 23-18-1-1 et seq.; § 23-18-3-3 (member non-liability); § 23-18-4-1 (management); § 23-18-4-3 (written consent); § 23-18-4-4 (indemnification); § 23-18-4-5 (fiduciary duties); § 23-18-4-7 (books and records); § 23-18-5-5 (unlawful distributions); § 23-18-6-4 et seq. (dissociation); § 23-18-9-1 et seq. (dissolution and winding up); § 23-18-12-1 (registered agent); § 23-18-12-2 (annual report); § 26-2-8-104 (Indiana UETA - electronic signatures). Federal: I.R.C. §§ 704, 1361, 6221 et seq. (BBA audit rules); Treas. Reg. §§ 1.704-1(b), 1.704-2, 301.7701-3. As of: June 2026.
> TEMPLATE DISCLAIMER - NOT PROFESSIONAL ADVICE: This document is a template for informational purposes only and does not constitute legal, tax, or accounting advice. LLC operating agreements are complex and must be tailored to the specific circumstances of the company and its members. Consult a licensed Indiana attorney and a qualified tax professional before adopting or relying on this agreement.
