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West Virginia LLC Operating Agreement

Your West Virginia LLC operating agreement is a legal document that establishes rules for how your LLC will handle procedures like voting, allocating profits and losses, management, and even—should it ever come to this—dissolution.

An operating agreement is an internal document, but that doesn’t make it any less important than documents filed with the state. In fact, adopting a strong operating agreement is essential. That’s why we at Northwest offer a range of free, attorney-drafted operating agreement templates, customized for West Virginia LLCs.

Should a West Virginia LLC have an operating agreement?

Yes! A West Virginia 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.

West Virginia Code § 31B-1-103 (2019) does not explicitly require LLCs to have an operating agreement—it even states that an operating agreement “need not be in writing.” However, a good operating agreement—written down—is essential for your LLC. Here’s why:

1. You’ll need an operating agreement to open a business bank account.

After you file your West Virginia Articles of Formation, one of the first things you’ll want to do is open a business bank account. This is one of the most basic ways to maintain limited liability—and you’ll need an operating agreement to do it.

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

To benefit from limited liability, business owners must show that their LLC is its own legal entity separate from its owners. One way to do this is to open a business bank account for your LLC. Another way is to create (and follow) an operating agreement.

3. An operating agreement can help head off misunderstandings.

Sometimes two people just aren’t on the same page—it happens. But having an agreed-upon set of rules and procedures for your business can help prevent those misunderstandings from flaring up into bigger issues.

4. An operating agreement can override West Virginia’s default laws.

If you don’t have an operating agreement, your LLC will automatically be governed by West Virginia’s LLC statutes. The problem is that these default laws might not suit your business. To make sure you’re able to operate your business in the way you see fit, it’s best to create an operating agreement.

West Virginia 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 Ripley Associates LLC, where the failure to adopt an operating agreement (coupled with bad faith conduct by the other members) resulted in an economic windfall for the spouse of a deceased member. Over the protests and objections of the remaining members, the courts applied the statutory default ‘gap filler’ rules for partnerships, specifically the default rule that remaining members were legally required to buy out the deceased member’s ownership interest for fair market value, because the members failed to adopt and formalize their LLC operations with an operating agreement.

“Had the members taken the time to plan ahead, discuss potential pain points, and distill their understanding into a written agreement, such extensive and expensive litigation (and the results) could have been avoided, preserving valuable resources for more commercially fulfilling purposes. For these reasons (and more), a reasonably prudent business owner would (and should) adopt and maintain an operating agreement.”

What is included in a West Virginia operating agreement?

Technically, your operating agreement can cover anything (within the law) not already covered by West Virginia’s Uniform Limited Liability Company Act. However, having a strong operating agreement is essential, and should include information about the following:

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

West Virginia LLC Operating Agreement Template

Northwest offers free, attorney-drafted West Virginia operating agreement templates for a range of LLC management structures. Choose the one that works best for your business.

FAQs

Is an operating agreement required in West Virginia?

No. West Virginia’s statute’s don’t explicitly state that LLCs must have an operating agreement. However, you’ll need an operating agreement for several important tasks, like opening a business bank account and maintaining limited liability.

Do I have to file my operating agreement in West Virginia?

No. Your operating agreement is an internal document, which means you’ll keep it on file with your own LLC documents.

Does a single-member LLC need an operating agreement?

Yes, in fact. While it might seem strange to have to create an agreement with yourself, even a single-person LLC needs an operating agreement to open a business bank account and—perhaps most importantly—maintain 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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