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:
- Activities of your LLC
- Transfer of membership interest
- Voting rights and decision-making powers
- Initial contributions
- Profits, losses, and distributions
- Management
- Compensation
- Bookkeeping procedures
- Dissolution
Indiana state code § 23-18-4-5 lists some common provisions that an LLC may include in their operating agreement.
What information do I need for Northwest’s free Indiana LLC operating agreement?
Want to focus on your business and leave the legal fuss to us? Our lawyers have 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 are a few spots in our template where you’ll need a signature from one or more members.
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 conduct 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 opening 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.”
FAQs
You are not required to have an operating agreement for your Indiana LLC. However, without one, your LLC is automatically governed by Indiana’s default LLC laws.
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 you to keep written operating agreements and amendments your LLC has entered into (including operating agreements that are no longer in effect) at your place of business.
Yes. It may seem a little weird, but even a single-member LLC will need an operating agreement for things like opening a bank account and reinforcing limited liability. An operating agreement is also necessary for overriding Indiana’s default LLC laws.
*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.