Llc Operating Agreement requirements in Washington
- Although not required by Washington state law to form an LLC, an operating agreement is highly recommended for all multi-member LLCs and even single-member LLCs.
- The operating agreement should be signed by all members (owners) of the LLC. While notarization is not required, it is advisable to have signatures witnessed to avoid future disputes.
- While not filed with the Washington Secretary of State, you must keep the operating agreement with your business records and update it as needed.
- The agreement should comply with Washington's LLC Act (RCW 25.15) to avoid conflicting with state default rules.
- If you form your LLC with multiple members, the operating agreement can help establish the percentage of ownership, profit and loss distribution, and voting rights.
The process in Washington
- Decide whether your LLC will be member-managed or manager-managed, and clearly state this in the operating agreement.
- Include the names and addresses of all members, and specify each member's capital contribution (money, property, or services).
- Outline the profit and loss distribution percentages. You may choose to distribute profits in a way that differs from ownership percentage.
- Define the voting rights and decision-making process for major business decisions, such as admitting new members or selling the company.
- Add provisions for meetings, record-keeping, and how to handle the transfer of membership interests.
- Cover dissolution procedures, including how the LLC will wind up its affairs and distribute assets.
Ready to form your Washington LLC? Download our free operating agreement template to get started.
Create your LLC operating agreementBudgeting for a Llc Operating Agreement
The cost to create an operating agreement for your Washington LLC varies. You can draft it yourself using templates (often free or low-cost), hire an attorney (typically $500–$1,500), or use an online service. The state filing fee for the Articles of Organization is separate and currently $200.
Before You Begin: LLC Operating Agreement Checklist
This checklist helps you gather the necessary information and understand Washington-specific requirements before drafting your LLC operating agreement.
- Confirm your LLC's name is distinguishable and includes 'Limited Liability Company' or an approved abbreviation (e.g., LLC).
- Have your Washington UBI (Unified Business Identifier) number and the filing date of your Certificate of Formation ready.
- Decide on member contributions (cash, property, or services) and ownership percentages to outline in the agreement.
- Determine management structure: member-managed or manager-managed, and list all members/managers with contact information.
- Understand Washington's rules: operating agreements don't need to be filed with the Secretary of State, but keep a signed copy for your records.
- Note that Washington does not require notarization or witnesses for operating agreements, but signatures of all members are recommended.
- Plan for amendments: specify how the agreement can be changed (e.g., majority vote) to avoid future disputes.
- Consider addressing dispute resolution procedures, buyout provisions, and what happens upon a member's departure or death.
FAQs
Is an operating agreement required to form an LLC in Washington?
No, Washington state does not require you to file an operating agreement with the Secretary of State. However, it is a crucial internal document that helps protect your limited liability status and clarify management.
Does my Washington LLC operating agreement need to be notarized?
No, Washington law does not require notarization. However, having the agreement notarized can add authenticity and help in case of legal challenges. It's a good practice but not mandatory.
Can I write my own operating agreement for my Washington LLC?
Yes, you can draft your own, but it must comply with Washington's LLC laws to be enforceable. Using a reputable template or consulting an attorney is wise to ensure it covers all necessary provisions.
What happens if I don't have an operating agreement in Washington?
Without an operating agreement, your LLC will be governed by the default rules in Washington's LLC Act. These default rules may not reflect your intentions, potentially leading to disputes. Also, a written agreement helps prove the separate legal existence of your LLC, which is important for personal liability protection.