Operating Agreement LLC Ohio

An Ohio Limited Liability Company (LLC) Operating Agreement is a written contract between the LLC Members. It outlines the operational rules for the business, the ownership structure, and the management framework. It is an internal legal document that governs how Members interact and how the LLC operates.

Is an Operating Agreement Required in Ohio?

An Operating Agreement is not required under Ohio law. Section 1706.08 of the Ohio Revised Code (ORC) states that an LLC is not required to adopt one. If no Operating Agreement exists, the LLC follows the default rules found in ORC §§ 1706.01 to 1706.84.

Benefits of Adopting an Operating Agreement

• Reinforces limited liability. Helps demonstrate the LLC exists as a separate legal entity, which is important for Single Member LLCs. • Prevents disputes. Establishes procedures for management, decision making, and profit allocation. • Defines ownership. Lists Members and their ownership percentages. Without it, ownership defaults to equal division. • Ensures continuity. Clarifies procedures related to a Member’s death, disability, retirement, or removal.

Management Structures

Member Managed LLC: All Members participate in daily operations and have authority to bind the LLC. Voting powers correspond to Membership Interest.

Manager Managed LLC: Designated Managers run daily operations and can bind the LLC. Members take a passive role but vote to elect Managers and vote on major actions. Voting powers correspond to Membership Interest.

Key Content to Include in an Ohio Operating Agreement

Basic Information

• LLC name and effective date
• Purpose and duration
• Registered Agent information
• Tax classification (Sole Proprietorship, Partnership, S Corp, C Corp)

LLC Ownership and Capital Contributions Lists all Members and their Membership Interests. Includes initial capital contributions or planned contributions.

Taxation and Distributions Specifies the LLC’s tax classification and how profits and losses are shared and distributed.

Voting and Decision Making Defines voting power, vote thresholds, and meeting rules. ORC requires unanimous approval for actions such as admitting new Members or amending the Operating Agreement unless the Agreement states otherwise.

Consequences for Non Compliance

The Operating Agreement may include consequences for violating its terms, such as:

• Reducing the Member’s interest
• Subordinating the Member’s interest
• Forced sale of the Member’s interest
• Forfeiture of interest

Internal Document Status

The Operating Agreement is an internal document and is not filed with the Ohio Secretary of State. There is no filing fee. Each Member should keep a signed copy. Notarization is not required.

External Requirements

Banks, courts, or agencies may request a copy. An EIN from the IRS is required to open an LLC bank account.