What is included in an Idaho LLC Operating Agreement?
Technically, your operating agreement can include anything not covered by Idaho’s state statutes (within the parameters of the law). But a good operating agreement will include information about:
- LLC activities
- 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 for Northwest’s free Idaho LLC operating agreement?
Want to focus on your business and leave the legal stuff 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 Certificate 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 Idaho LLC have an operating agreement?
An Idaho 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.
While a written operating agreement isn’t mandatory (per Idaho Statute § 30-25-102), an operating agreement is necessary for many important aspects of your business. Here are some examples:
1. Your operating agreement proves you own your LLC.
In Idaho, you only need to include the name of one LLC member when filing your Idaho LLC Certificate of Organization. This is great for maintaining privacy, but not so great when it comes to showing proof of ownership, which you’ll need for things like opening a bank account and renting property. But because your operating agreement lists the names and addresses of all members, you can use it to prove who owns your LLC.
2. An operating agreement can help reinforce your limited liability status.
To benefit from limited liability status, business owners have to show a clear separation between personal and business finances and interests. Formalizing LLC processes in an operating agreement helps demonstrate that the LLC truly functions as an entity separate from its members.
3. An operating agreement can help settle disputes between members.
An operating agreement establishes rules for your company, which all members are legally obliged to follow. Should any misunderstandings or disagreements arise, a strong operating agreement can help you nip ‘em in the bud.
4. An operating agreement can override Idaho’s default laws.
If you don’t have an operating agreement, your LLC will be governed by Idaho’s state statutes. The problem is, Idaho’s default laws may not totally fit in with your business model. Creating your own operating agreement will help you customize your LLC’s internal operations in a way that works for you.
Idaho 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 Johnson v Crossett, where two individuals decided to pursue a business venture together. Following a handshake (unwritten) agreement, one of the individuals proceeded to form a single-member LLC. Later, the two individuals met to discuss the final touches on a draft operating agreement. While the two came to an understanding on the details, they both failed to actually execute the operating agreement. As a result, the second individual was determined by the courts to NOT actually be a member of the LLC. Litigation eventually occurred between the two original individuals, however the courts found in favor of the sole member of the LLC.
“Had the members of the LLC taken the time to plan ahead, discuss potential pain points, and distill their collective understanding into a written operating agreement, this dispute likely could have been avoided entirely.”
FAQs
Technically, no, a written document is not required. But if you don’t have a written operating agreement, your business operations must follow Idaho’s default rules.
No. Your operating agreement is an internal document, which means you’ll keep it on file with your personal records.
Yes. It may seem strange to create an agreement with yourself, but even a single-member LLC needs an operating agreement for some things. If your single-member LLC needs to open a bank account or prove your limited liability status, an operating agreement is an important legal document to have on hand.
*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.