Free Georgia LLC Operating Agreement
A Georgia operating agreement is a legal document that establishes the rules and procedures for your LLC. Once all LLC members have signed the operating agreement, it becomes a legally binding contract for how your LLC will handle important matters like the voting process, membership interest, profits and losses, and dissolution, should that become necessary.
Since an operating agreement is an internal document, you don’t need to file it with the Georgia Secretary of State. But it is still important to have an operating agreement that is tailored to your Georgia LLC’s requirements. Northwest provides a range of free, attorney-written operating agreement templates to get you started.
Why should a Georgia LLC have an operating agreement?
A Georgia LLC should have an operating agreement because a company cannot act for itself. In order to operate, LLCs require real humans (and other entities) to carry out company operations.
While a Georgia LLC is not legally required to adopt an operating agreement, having a solid operating agreement will work in your LLC’s favor in a variety of situations. Here are some examples:
1. Your operating agreement proves you own your LLC.
Georgia is a great state for starting an LLC if you’re worried about your privacy—the state doesn’t require you to list members’ names or addresses on the Georgia Articles of Organization. However, this can make it tricky to prove to a bank who actually owns your LLC, which you will most likely need to do in order to open a company bank account. Your operating agreement will have all members’ names and addresses listed, so you can use it as proof that you own your LLC.
2. An operating agreement can help reinforce your limited liability status.
In order to enjoy limited liability status, an LLC must be able to demonstrate its legal separation from its owners. One way to show this separation is by having your LLC’s rules, structure, and processes clearly outlined in your operating agreement and then following it to the letter. If you ever need to face a lawsuit, the strength of your operating agreement could make a huge difference in your case.
3. An operating agreement can help prevent unnecessary conflict.
When you’re running a business with a team of people, there are bound to be occasional misunderstandings. But by consulting your operating agreement—a contract you have all agreed upon ahead of time—you can prevent these misunderstandings from turning into intractable conflicts.
4. An operating agreement can override Georgia’s default laws.
Without an operating agreement, your LLC will be governed by Georgia’s default LLC statutes. These statutes might not be well-suited for your business. According to the Code of Georgia (GA Code § 14-11-1107) Georgia law will give “maximum effect” to the enforceability of operating agreements. So while Georgia doesn’t legally require operating agreements, it does give LLCs a lot of freedom in their ability to ENFORCE operating agreements if they have one—you’ll definitely want to take advantage of this.
Georgia Case Law
We asked our lawyers for an example of how an operating agreement can make or break your LLC. Here’s what they said.*
“Consider the case of Befekadu v Addis, where the failure to actually adopt and maintain an operating agreement led an individual to mishandle LLC assets and funds. This mishandling, coupled with a lack of transparency and accountability, created disputes among the members resulting in extensive and expensive litigation. Had the members of the LLC taken the time to plan ahead, discuss potential pain points, and distill their collective understanding into an operating agreement, then such valuable resources could have been devoted to more fulfilling commercial purposes.”
What is included in a Georgia LLC Operating Agreement?
Your operating agreement should address your LLC’s plans for handling “big picture” issues. Technically, you can include anything in your operating agreement that isn’t prohibited by Georgia law. But you should be sure to include the following topics:
- Transfer of membership interest
- Voting rights and decision-making powers
- Initial contributions
- Profits, losses, and distributions
- Bookkeeping procedures
Is an operating agreement required in Georgia?
Georgia state law doesn’t require you to have an operating agreement. However, Georgia state policy gives “maximum effect” to freedom of contract, so a strong operating agreement can give you a lot of power to better control your LLC in this state.
Do I have to file my operating agreement in Georgia?
Nope, you do not need to file your operating agreement with the Georgia Secretary of State. The operating agreement is an internal document for you to keep on record.
Does a single-member LLC need an operating agreement?
Yes. While a single-member LLC doesn’t need to worry about resolving disputes between members, there are many other important uses for an operating agreement. Your operating agreement helps you prove that you own your LLC and will allow you to open a business bank account. More importantly, in the case of a lawsuit, the operating agreement can help your LLC maintain limited liability. Without an operating agreement, it may be difficult for a court to distinguish between a single-member LLC and a sole proprietorship—a business class that doesn’t have limited liability.
*This is informational commentary, not advice. This information is intended strictly for informational purposes and does not constitute legal advice or a substitute for legal counsel. This information is not intended to create, nor does your receipt, viewing, or use of it constitute, an attorney-client relationship. More information is available in our Terms of Service.