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Northwest Registered Agent, LLC

Tennessee LLC Operating Agreement

Your operating agreement is the legal blueprint for your Tennessee LLC. It is the binding contract between your LLC members that formalizes your agreements on issues such as how much each member will contribute, how voting will work, how profits and losses will be distributed, and what will happen if you decide to dissolve the business. You can use one of our attorney-drafted templates to fill out, save, and download your operating agreement for free.

A Tennessee operating agreement is an internal document, so it isn’t filed with the Secretary of State. That said, an operating agreement isn’t just useless paperwork. It’s an essential document for your LLC. We know that for a first-time business owner, creating an operating agreement is daunting. That’s why Northwest provides free, attorney-drafted, Tennessee-specific operating agreement templates for your LLC.

What is included in a Tennessee operating agreement?

Your operating agreement is the guiding document for how your LLC will function internally. You can include anything not prohibited by Tennessee law, but no matter what, your operating agreement should cover the following topics:

  • Transfer of membership interest
  • Voting rights and decision-making powers
  • Initial contributions
  • Profits, losses, and distributions
  • Management
  • Compensation
  • Bookkeeping procedures
  • Dissolution

What information do I need to use Northwest’s Free Tennessee LLC operating agreement?

Want to focus on your business and leave the legal hullabaloo to us? Our lawyers drafted a comprehensive operating agreement you can use for free. You can even fill it out on this page, save it in a free account for later, and download a completed draft to sign.

In order to fill out our free operating agreement template, you’ll need your:

This must be your business’ legal entity name, or the name you put on your LLC Articles of Organization.

Did an LLC member contribute $500? $5k? A storefront? Put that here.

You’ll just write in 16 here since our version has a set amount of pages.

Remember, this is an internal document, so you won’t have to submit these names to the state just because they’re on here. However, you might need to add these people to your BOI Report.

Include any initial contributions, even if it’s only a small percentage.

While we recommend having a business bank account, some banks like to actually see the operating agreement before you open the account. If that’s the case, you can leave this blank for now.

This is the place your business operates from.

You can add this in later if you aren’t sure when your meeting will be held.

There’s a few different spots where you’ll need to add at least one members’ signature. These are on pages 13, 14, 15, and 16 on our template.

Why should a Tennessee LLC have an operating agreement?

A Tennessee 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.

According to TN Code § 48-206-101 (2019), only director-managed LLCs (LLCs managed by a board of directors, like in a corporation) are required to have an operating agreement. Most types of LLCs may have an operating agreement but are not required to. Even so, we at Northwest highly recommend adopting a written operating agreement.

1. Your operating agreement proves you own your LLC.

The Tennessee Articles of Organization do not require you to list members’ names and addresses, which is great for keeping your private information off the public record. But it could make it harder to prove to a bank, landlord, or potential investor that you actually own your LLC. For that, you’ll need a written operating agreement with all members’ names and addresses listed.

2. An operating agreement can help reinforce your limited liability status.

To benefit from limited liability status, an LLC has to be able to prove that it is a legally separate entity from its owners. One way to do this is by following the rules and procedures in your operating agreement. If you’re ever served with a lawsuit, you’ll make your attorney’s job much easier if you have a strong operating agreement.

3. An operating agreement can help prevent misunderstandings.

Occasional conflict is bound to arise when people go into business together. Since all your members have already agreed to the rules set out in your operating agreement, it’s a handy document to consult when you can’t agree on a next step.

4. An operating agreement can override Tennessee’s default laws.

In the absence of an operating agreement, your LLC will be subject to Tennessee’s default LLC statutes. These statutes might not work well for your company. A customized operating agreement will give you more freedom in how you run your LLC.

Tennessee 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 Bridgeforth v Jones, where the failure to adopt an operating agreement opened the door to the inevitable dispute among the members regarding the obligations for capital contributions and the actual amount of ownership interest allocated to the members. Assuming good faith on all parties, the Bridgeforth case is an excellent example of why it is important to plan ahead, discuss potential sticking points, and distill the members’ understanding into a written agreement.

“Had the members taken such steps, this misunderstanding would likely have been avoided, meaning that the resources diverted to the expensive and extensive litigation were used resolving a misunderstanding rather than being used for more fulfilling purposes. For these reasons (and more), a reasonably prudent business owner would (and should) adopt and maintain an operating agreement.”

Tennessee LLC Operating Agreement Template

Below are our free, attorney-drafted Tennessee operating agreement templates. Choose the one that best matches the ownership and management structure of your LLC.

Tennessee Single-Member
LLC Operating Agreement
Tennessee Multi-Member
LLC Operating Agreement
Tennessee Manager-Managed
LLC Operating Agreement

FAQs

A written operating agreement is not legally required for most Tennessee LLCs (the exception being director-managed LLCs). Even so, having a written operating agreement is essential for opening a business bank account, heading off disagreements between members, and bolstering your limited liability status.

Nope, Tennessee law doesn’t require you to file your operating agreement with the state. Your operating agreement is an internal document your LLC should keep on record.

Absolutely! While you won’t need to worry in a single-member LLC about members disagreeing, a written operating agreement is still necessary for opening a business bank account. More importantly, if you ever face a lawsuit, your operating agreement can help you maintain your limited liability status. A single-member LLC without an operating agreement could look dangerously similar to a sole proprietorship, which does not 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.

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