Missouri LLC Operating Agreement
A Missouri operating agreement is the legal document that determines the rules and procedures your LLC will follow. Once all of your members have signed the operating agreement, it is a legally binding contract, governing how your LLC will function in important situations, including voting, transferring membership interest, allocating profits and losses, and dissolving the business, if it ever comes to that.
Unlike the Missouri Articles of Organization, your operating agreement is an internal document that doesn’t need to be filed with the Missouri Corporations Division. However, every Missouri LLC is required to have one. Since we know that creating an operating agreement from scratch is daunting, Northwest offers free, attorney-drafted operating agreement templates specific to Missouri LLCs to get you started.
Why should a Missouri LLC have an operating agreement?
A Missouri 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.
Operating agreements are legally required for Missouri LLCs. According to Missouri Revised Statute § 347.081, “the member or members of a limited liability company shall adopt an operating agreement.” While Revised Statute § 347.015 states that an operating agreement could be oral or written, we (and any good lawyer) recommend you put your operating agreement in writing. Here’s why.
1. Your operating agreement proves you own your LLC.
In Missouri, you can opt out of listing LLC members’ names on the Articles of Organization. This is great if you’re concerned about protecting your privacy, but it could make it tricky for you to prove you actually own your business, which you’ll need to do to open a company bank account. That’s when a written operating agreement comes in handy, as it lists all your members’ names and addresses.
2. An operating agreement can help reinforce your limited liability status.
To maintain limited liability, all LLCs need to be able to prove that they are legally separate entities from their owners. This requires LLCs to keep business and personal finances and interests separated. Another way to help demonstrate that your LLC is a distinct legal entity is by adhering to the rules and proceedings outlined in your operating agreement. If you’re ever served with a lawsuit, a strong operating agreement could be one of your best weapons for proving your LLC has limited liability status.
3. An operating agreement can help settle disputes between members.
Disagreements are likely to arise when you go into business with other people, but you don’t want a minor disagreement to escalate into a legal battle. Your operating agreement plans for how your LLC will handle a range of situations, so you can refer back to it when your members can’t agree.
4. An operating agreement can override Missouri’s default laws.
Anything you don’t change in your operating agreement will automatically be subject to Missouri’s default laws for LLCs. You might prefer to create your own rules for your business. That’s why it’s important to have a custom operating agreement that’s tailored to your LLC.
Missouri 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 Keller Biomedical LLC, where a group of individuals met to discuss a potential business venture. Unfortunately, the group failed to adopt and maintain an operating agreement, so when a dispute among those individuals arose, the courts lacked a sufficient record to decide in favor of the individual claiming to be wronged. In particular, the court noted that because the individual was not listed in the LLC’s Articles of Organization nor in an operating agreement as a member, the courts found that the individual was NOT a member of the LLC, and therefor was not entitled to the rights of LLC members under the statutes.
“This case is an excellent example of why it is important to adopt and maintain an accurate operating agreement. Assuming good faith on all parties, this dispute related to membership status would have been avoided had the individuals taken the time to plan ahead, discuss potential pain points, and distill their agreement into a written operating agreement. This is especially important when the LLC members are not actually listed in the LLC Articles of Organization. For these reasons (and more), a reasonably prudent business owner would (and should) adopt and maintain an operating agreement.”
What is included in a Missouri LLC Operating Agreement?
Your operating agreement puts into writing how your LLC functions internally. You can technically include almost anything in your operating agreement—as long as it’s not prohibited by Missouri law—but 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 Missouri?
Yes. Missouri Revised Statute § 347.081 states that LLC members shall adopt an operating agreement. A written operating agreement is almost always necessary for opening a business bank account. And it’s a vital tool for reinforcing your limited liability protection in case of a lawsuit.
Do I have to file my operating agreement in Missouri?
No, you aren’t required to file your operating agreement with the Missouri Corporations Division. The operating agreement is an internal document you keep on record at your business.
Does a single-member LLC need an operating agreement?
Yes! We know it seems strange—why would you need to write an agreement with yourself? But a written operating agreement is necessary to open a business bank account, and it will be crucial if you ever need to fight a lawsuit. In a court case, a single-member LLC without an operating agreement could look perilously similar to a sole proprietorship, which does not have 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.