What is an operating agreement for an LLC, and do I need one in Washington State?
An operating agreement is an internal governing document that outlines how your Limited Liability Company (LLC) will be run. It is written by the LLC's members and includes ownership structure, member roles, voting rights, profit distribution, and what happens if a member leaves or the business dissolves. Think of it as a blueprint for how your business operates behind the scenes.
In Washington State, you are not legally required to have an operating agreement to form an LLC — but it’s strongly recommended, even if you're the only member. Here’s why:
- Protects your limited liability status by showing that your LLC is a separate legal entity
- Prevents disputes by clearly defining responsibilities and decision-making rules
- Helps with banking and legal matters — some banks and investors may ask to see it
- Overrides state default rules that may not reflect your business’s needs
If your LLC doesn’t have an operating agreement, Washington State’s default laws (RCW 25.15) will govern how your business operates, which may not align with your preferences.
In essence, an operating agreement is not required by the state, but it is in your best interest to have one in order to protect your business and avoid future headaches.
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