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What Is an LLC Operating Agreement?

An LLC operating agreement is a legally binding document that outlines how a limited liability company (LLC) is structured and managed. It defines the roles and responsibilities of members, how profits and losses are shared, and how key financial and operational decisions are made. While not required in most states, having an operating agreement is essential. It allows members to customize the terms of the LLC to fit their specific needs and helps prevent misunderstandings by serving as a clear set of internal rules. Without it, the LLC is governed by default state laws.