Free Indiana LLC Operating Agreement
An Indiana operating agreement is a legally binding contract between members that establishes the rules and procedures for your LLC. The operating agreement determines how your LLC will handle key procedures like voting, transferring membership interest, allocating profits and losses, and dissolving the business.
Because an operating agreement is an internal document, you won’t be required to file it with the Indiana Secretary of State. But this doesn’t mean your operating agreement should be an afterthought. We know that crafting a strong operating agreement on your own is an overwhelming project. That’s why Northwest provides free, attorney-drafted operating agreement templates customized for Indiana LLCs.
Why should an Indiana LLC have an operating agreement?
An Indiana 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.
Indiana state law does not mandate that LLCs adopt an operating agreement. Indiana state code § 23-18-4-5 states that LLCs may enter into an operating agreement but does not require them to do so. Even so, it is in your company’s best interest to have a written operating agreement. Here’s why:
1. Your operating agreement proves you own your LLC.
In Indiana, you are not required to list all members’ names on the Articles of Organization. While this helps you protect your privacy, it can make it difficult to prove who owns your LLC when you open a business bank account. This is when having an operating agreement that lists your members’ names and addresses will come in handy.
2. An operating agreement can help reinforce your limited liability status.
If you ever face a lawsuit, you’ll need to be able to show that your LLC is a legally separate entity from its members. Detailing your LLC’s rules and protocols in an operating agreement helps show that your LLC is a distinct legal entity that follows its own set of guidelines and has its own limited liability.
3. An operating agreement can help resolve disagreements.
Your LLC members may occasionally disagree on a key issue. Having your initial verbal agreements in writing gives you a handy document to consult when you can’t agree on what to do next.
4. An operating agreement can override Indiana’s default laws.
If you choose not to adopt an operating agreement, your LLC will be subject to Indiana’s default LLC laws. You might not want these laws to control your business. Having a modified operating agreement gives you more control over your LLC.
Indiana 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 Blacklidge v Blacklidge where the failure to actually adopt and maintain an operating agreement led to disputes among the members (who were father and son), resulting in extensive and expensive litigation. Such valuable resources (and relationships) could have been preserved had the members of the LLC taken the time to memorialize and distill their understanding into a clear written operating agreement. For these reasons, inter alia, it is important to not only adopt a written operating agreement, but it is also important to maintain an operating agreement for your LLC.”
What is included in an Indiana LLC Operating Agreement?
Your operating agreement should address every major situation your LLC is likely to face. While you’re technically free to include almost anything in your operating agreement—as long as it doesn’t contradict Indiana state law—there are certain topics that every operating agreement should cover:
- Membership interest
- Voting rights and decision-making powers
- Initial contributions
- Profits, losses, and distributions
- Bookkeeping procedures
Indiana state code § 23-18-4-5 lists common provisions that an LLC may include in their operating agreement.
Is an operating agreement required in Indiana?
You are not required to have an operating agreement for your Indiana LLC. However, in the absence of an operating agreement, your LLC will automatically be governed by Indiana’s default LLC laws.
Do I have to file my operating agreement in Indiana?
Nope! An operating agreement is an internal document, so you don’t need to file it with the state of Indiana. However, Indiana state code § 23-18-4-8 does require that you keep any written operating agreements and amendments your LLC has entered into (including operating agreements that are no longer in effect) at your place of business.
Does a single-member LLC need an operating agreement?
Yes. You may feel silly signing a written agreement with yourself, but operating agreements serve several important functions for single-member LLCs. You will almost certainly need an operating agreement to open a company bank account or fight a lawsuit. A single-member LLC that doesn’t have an operating agreement could seem dangerously similar to a sole proprietorship—a business entity without limited liability protection.
*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.