Wyoming LLC Operating Agreement

Why should a Wyoming LLC have an operating agreement?

A Wyoming 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.

In Wyoming, per WY Stat § 17-29-102 (2019), an operating agreement can be oral, implied, or in a record. We (and any lawyer worth her salt) recommend you get your operating agreement down in writing. Here’s why.

1. Your operating agreement proves you own your LLC.

Wyoming is a great state for privacy protection—it doesn’t require member names or addresses to be listed on Articles of Organization. But if you have a registered agent form your LLC to keep your information off the public record, it can be tricky to prove that you own your Wyoming LLC.

This is where an operating agreement comes in handy. It will list the names and addresses of your members, so you can use it to show a bank or a potential landlord who owns your LLC. And since it’s an internal document, your members’ privacy is protected.

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

The main perk of forming an LLC in Wyoming is, of course, the liability protection it affords its owners. But that limited liability isn’t bulletproof. To maintain limited liability, an LLC must be able to demonstrate that it’s a separate legal entity from its members, unlike a sole proprietorship or general partnership. Adopting an operating agreement is a formality that does just that.

3. An operating agreement can head off misunderstandings.

Miscommunication happens, even among good friends. It’s important to cement verbal agreements in writing so that you have something to refer to if a dispute arises.

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

In the absence of an operating agreement, Wyoming’s state laws govern your LLC. Those laws might not be a great fit for your LLC. For better control over your LLC, you’ll want a customized operating agreement.

Wyoming 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 Kite Ranch, LLC where the failure to actually adopt and maintain an operating agreement led to disputes among the members, resulting in extensive and expensive litigation. Such valuable resources could have been preserved had the members of the LLC taken the time to memorialize and distill their understanding into an operating agreement. Because the members of the LLC in Kite Ranch failed to adopted and maintained an operating agreement, specifically one that addressed the importance of capital contributions to the LLC, the dispute related to LLC management escalated to litigation among the members, jeopardizing the viability of the LLC’s operations and the relationships among the members.

For the above reasons (and more), a reasonably prudent business owner would (and should) adopt and maintain an operating agreement.”

What is included in a Wyoming operating agreement?

Your operating agreement is the blueprint for how your Wyoming LLC will function internally. Technically, it could include anything not prohibited by Wyoming state statutes, but a strong operating agreement should cover:

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