Georgia Operating Agreement

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Georgia LLC Operating Agreement

How to form an LLC in Georgia
This Quick Start Guide is a brief overview of how to form an LLC in Georgia.

Detailed Lessons:

 

Georgia LLC Costs:
Georgia state fee: $100
Annual registration fee: $50 per year

Need help?
Hire a reliable service to form your Georgia LLC:
Northwest ($39 + state fee) or LegalZoom ($149 + state fee)

(check out Northwest vs LegalZoom)


Video Transcript:

The following information is provided for educational purposes only and in no way constitutes legal, tax, or financial advice. For legal, tax, or financial advice specific to your business needs, we encourage you to consult with a licensed attorney and/or CPA in your state. The following information is copyright protected. No part of this lesson may be redistributed, copied, modified or adapted without prior written consent of the author. An Operating Agreement is an agreement between the members of the LLC that sets forth how the LLC will be managed both financially and operationally. Unlike your LLC Formation Documents, the Operating Agreement does not need to be mailed in to the State. It is an “internal document”, meaning you’ll just need to keep a copy with your business records. The purpose of an Operating Agreement is to spell out who the members are and what percentage of the LLC they own (also known as their membership interest). It also defines how the LLC is managed, how taxes are paid, and how profits and losses are distributed amongst the members. You will find both the PDF and the Microsoft Word versions below this video in the download Section. You can print these out and fill them out by hand, or type directly in them with your computer (whatever is most convenient for you). We will show you how to complete your Operating Agreement regardless if you are a single-member LLC (with just 1 member) or if you are multi-member LLC (with 2 or more members). The Operating Agreement that is provided as a generic Operating Agreement that will work for the majority of businesses. If your business requires industry-specific management, complex ownership agreements, has multiple investors or a large amount of members, we recommend getting the help of an attorney. You can complete the Operating Agreement provided as a base for your initial conversation with your attorney. This may save you time and money. If you are single-member LLC or a family-owned LLC, this may be less of an issue for you (unless you have a crazy family)… then we recommend you seek legal advice to prepare this document. You may need to provide a copy of your Operating Agreement to: a lender if you are obtaining financing; a title company if you are purchasing real estate; accounting and tax professionals for financial assistance; lawyers for legal advice or potential investors or partners have an interest in your business. Also, if you find yourself a party to a legal action, the court will likely ask for a copy of your LLC’s Operating Agreement. This can help document to the court that you have a well-organized structure for handling issues that arise in relation to your LLC. One of the benefits of forming an LLC is the flexibility of managing your business. The Operating Agreement is a working document that is meant to be fluid and allow for changes as your business grows. If you make simple changes such as a change of address for a member, or you change your Registered Office or Registered Agent, open the original Operating Agreement, make the changes you need and then save the document as a new version. For complex changes to your LLC, for example 1 member purchases the interest of another member, or you decide to raise financing with investors, it is best to hire an attorney as this is not something we recommend you do yourself. If changes are made, you’ll need to print out the new Operating Agreement and have all the members sign. It is best practice to keep a copy of all previous versions on file in order to complete your Operating Agreement. In order to complete your Operating Agreement, you will need some basic information. It is easiest to grab a copy of your LLC Formation Documents as it already has most of the information you will need such as: the formation date of your LLC, the name and address of the Registered Office and Registered Agent, the general business purpose of the LLC, the members, percentages of ownership, and the names of the members and their addresses. We are now ready to fill out the Operating Agreement. You can download this document below the video. Let’s get started. Here we are in the Operating Agreement. Please note that I’m using Microsoft Word to edit this document. If you don’t have Microsoft Office, you can use similar and free software called Open Office, or you can use Google Docs. If you prefer to just print and fill out by hand, we’ve also included this document in PDF format. You can then open this document on your computer, print it, and then fill it out by hand using blue or black ink. Let’s get started. In Section 1, I’m going to list the name of the LLC, and the date in which I mailed in the LLC Formation Documents. Again, it’s easiest to reference your Formation Documents as most of the information can be found there. I’m going to now fill out Section 1. Alright, let’s move down to Section 2. Please note in this video example, I’m going to be filling out this Operating Agreement for a Texas LLC. This Operating Agreement will work for all 50 states, so no matter what state you’re forming your LLC in, everything for the most part is going to be pretty much the same. You’re just going to adapt it, change it, for your State. In Section 2 on the 1st line, I’m going to fill in the State in which the LLC was formed, and then I’m going to write the Effective Date. This is going to be the same date as in Paragraph 1. Let’s now go down to Section 4, where we’re going to list the Registered Office and Registered Agent. This will either be yourself, someone you know, or a Commercial Registered Agent. This information will be identical to the Registered Office and Registered Agent that you have listed in your LLC Formation Documents. In this example, we hired a Commercial Registered Agent. I’m now going to fill in Section 4. Don’t worry that in my example the address looks a little funny. Northwest Registered Agent is an approved Registered Agent within all 50 states, so their addresses are formatted a bit differently than we’re used to seeing. Let’s scroll down to Number5. Number5 is where we’re going to list the business purpose of the LLC. This can be a few words or a few sentences that describe the purpose of the LLC. Now many people do ask those questions of how specific they need to be, and if they mention something here, if they’re going to be pigeonholed and forced to do that forever. No you’re not. Remember, this is a fluid document and you can make changes, and it’s best to usually use something a little bit more generic here. This LLC is a marketing agency, so I’m going to list that in Section 5. Under Number 6, the duration of the LLC, you’re going to list “Perpetual”. “Perpetual” means that the LLC will be in existence, until the members decide to close (also known as “dissolve”) the LLC. All right, let’s scroll down and go to the next Section. We’re going to continue scrolling through Page 1, we’re going to go to Page 2, and we’re actually going to end up at the bottom of Page 2 underneath “Tax and Financial Provisions Number1” (the tax classification of the LLC). If you are single-member LLC, for tax purposes the IRS is going to tax your LLC just like a Sole Proprietorship. So in this case, if you’re a single-member LLC, we’re going to list “Sole Proprietorship”. Now, if you’re a multi-member LLC with 2 or more members, the IRS is going to tax your LLC just like it would tax a Partnership. So if you’re multi-member LLC, you’re not going to put the word “Sole Proprietorship”, you’re going to put “Partnership”. Let’s move forward. Here we are at the top of Page 3, Number2 (the “Tax Year and Accounting Method”). The tax year of this LLC shall be the “calendar year”. The LLC shall use the “cash method” of accounting. And that completes Number 2. Let’s go down further. Here we are in Section 4 (“Capital Provisions”). Under Number 1, we’re going to list the date in which all members made their contribution to the LLC. This will most likely be the date that the LLC was formed, or that it became effective. Feel free to use the same date that you used at the top of Page 1 under Number 1. Let’s move on and list the names, addresses, contribution, and percentage of interest in the LLC for all the LLC’s members). For this example, this is going to be a multi-member LLC owned by a husband and wife. If you are a single-member LLC, you’re just going to list your name and your address, the contribution, and then under “Percent Interest”, you’re going to put a hundred percent. In this document, we have 3 areas where you can list the names and addresses of the LLC’s members. If you have more than 3 members feel free to add additional lines below. For our example, I’m going to put the name and address of a husband-and-wife-owned LLC where each member owns 50 percent interest. If you or the members of the LLC did not make an actual cash contribution, feel free to simply lists $100. Let’s move forward. Let’s scroll down to Page 4 where we’re going to go to Number 8 (“Allocation and Distribution of Cash”). In this blank line, you’re simply going to put “all of the members”. Under Section 5 (“Membership, Withdrawal and Transfer Provisions”), in this blank line you’re going to put “60” for 60 days. 60 days is the amount of days that we recommend. However, if your business needs more or less time, this is flexible, so feel free to make those adjustments as needed. Let’s scroll down to Page 5. Underneath Section 6 (“Dissolution Provisions”), where it says “except that within blank”, I’m going to list “60 days”. Again, this is flexible, so feel free to adjust for your business if needed. All right, let’s move forward. We’re nearly complete with the Operating Agreement. We’re going to scroll through Page 5 and go to Page 6, and only thing that we have left to do is list the members, sign, and date the Operating Agreement. If you just have 1 member, you’re simply going to put the date that you’re signing this document. After you print it out, you’ll sign on the 2nd line, and then you’re going to put your name on the 3rd line. Again for this example, this is a multi-member husband-and-wife LLC, so I’m going fill out this Section real quick. So in my example, I’ve listed “1/1/2014, wrote “John Doe”, and the same thing on Page 7 (“1/1/2014 and Mary Doe”). All they would need to do is simply print this document, and sign on both of those lines. In this sample document, we have 3 areas for members. If you’re not using any signature blocks, feel free to just simply put an “X” through them if you’re filling this document out by hand, or if you’re on the computer you can simply highlight and delete them. Also, if you have more than 3 members, feel free to add additional lines and signature blocks below. Please note: the LLC Operating Agreement does not need to be notarized. You’ll simply print out the document, have all members sign, and then you’ll just keep a copy with your business records. And this completes the LLC Operating Agreement.

Downloads

Both links below are to the same document. The 1st is a Word document. The 2nd is a PDF.

Operating Agreement (Word)

Operating Agreement (PDF)

Next Step

After you’ve completed and signed your LLC’s Operating Agreement, you can then proceed to the next Lesson: Tax ID Number (EIN).

Matt Horwitz
Founder & Educator, LLC University®
Forming an LLC shouldn't be so complicated. Our step-by-step guide will make the process a breeze – and no complex legal jargon! LLC University® teaches people how to form an LLC for free in all 50 states. We hope you find our free guides and resources helpful in your business journey.
Disclaimer: Nothing on this page shall be interpreted as legal or tax advice. Rules and regulations vary by location. They also change over time and are specific to your situation. Furthermore, this comment section is provided so people can share their thoughts and experience. Please consult a licensed professional if you have legal or tax questions.

26 Comments

  1. Claudio January 4, 2017

    Hi Matt,
    We are an Italian company and created the company LLC in Georgia. Actually we are not able to find a document from IRS that says who is the owner of the company: how and where can i request a document where i can see who are the responsible parties, the organizers and so on?

    Thanks in advance for your attention.

    Claudio.

    reply
    • Matt Horwitz January 4, 2017

      Hey Claudio, the IRS documentation (EIN Confirmation Letter) does not show the “owner”. It only shows the responsible party. Did you obtain an EIN with the IRS? How many members (owners) does the LLC have and who formed it? Ownership of an LLC is set in the Operating Agreement, and it’s not with the IRS. It’s also not set within the Georgia Articles of Organization. The Articles of Organization only has an Organizer, the person filing the paperwork. Ownership of an LLC is done “internally” via the Operating Agreement, between the people who agree to be its members. It sounds like you’re looking for a copy of the Articles of Organization and the Transmittal Form, correct? If so, do you not have a copy of them when you filed? Alternatively, you can search your LLC name here (https://ecorp.sos.ga.gov/BusinessSearch), then click on your LLC, click “Filing History”, then click “Business Formation”. Your LLC has 2 Organizers, but again, this does not necessarily reflect all owners. Hope that helps. Let me know if you need anything else!

      reply
      • Claudio January 9, 2017

        Hi Matt,
        thanks, you answer was very useful.
        Yes, we (our organizers) obtained the EIN, we filed the form 8832 and receive the approval.
        In the form 8832 we indicated the owner.
        What is the meaning of NAME SURNAME SOLE MBR indicated in the second line of the name and address of the assigned EIN?
        Concerning the Articles of Organization and the Transmittal Form i have to check and let you know.
        Thanks.

        reply
        • Matt Horwitz January 9, 2017

          Hi Claudio, first, why did you file Form 8832? This is not the correct form to obtain an EIN. Form 8832 is used to change the default tax status of a business entity.

          reply
          • Claudio January 10, 2017

            Hi Matt,
            i suppose we filed the 8832 to be taxable as a corporation.

            reply
            • Matt Horwitz January 10, 2017

              Hey Claudio, that is one way the form can be used. Just wanted to check to make sure you knew :)

              reply
          • Claudio January 10, 2017

            Hi Matt,
            if possible, can you kindly remove my surname and the company name from the first post?

            Thanks in advance,
            Claudio

            reply
            • Matt Horwitz January 10, 2017

              Hey Claudio, sure thing! I just did.

              reply
              • Claudio January 11, 2017

                Hi Matt,
                thanks.

                What is the meaning of
                NAME SURNAME SOLE MBR
                indicated in the second line of the name and address of the assigned EIN?

                reply
                • Matt Horwitz January 11, 2017

                  Hey Claudio, it is what the IRS calls the “responsible party“, the person who is in charge of making sure things are handled with the IRS. The Sole Member, means that when you applied for your EIN, you stated you only had 1 member. 1 member LLCs are taxed like Sole Proprietorship (FYI). Feel free to send us an email (these comment boxes get small) if you need more help with it.

                  reply
                  • Jean Hubert Nevelus November 19, 2018

                    Hey Claudio, if a single Member LLC are taxed like a Sole Proprietorship, does that mean I am liable for any taxes or debts? Or this only applies to being sued for any services from a company or Tenant if I were a Real Estate management company?

                    Also, if I am a sole member, would I still fill out a 1065?

                    reply
                    • Matt Horwitz November 23, 2018

                      Hi Jean, yes, as an LLC taxed as a Sole Proprietorship, the tax reporting and paying is your responsibility. No, a 1065 Partnership Return would be used by an LLC with 2 or more Members (an LLC taxed as a Partnership). Please see how are LLCs taxed. Hope that helps.

  2. Carolann Rucker July 8, 2017

    Hello,

    Thank you so much for this website. It made my life a whole lot easier!! I have one question. My husband and I are the only members of our LLC. Can I still put sole proprietorship LLC or do we need to do multi LLC under the tax and financial provisions. We have a 50 50 investment so I put the percentage 50% for each of us under capital provisions. Thanks for your help in advance.

    reply
    • Matt Horwitz July 8, 2017

      You’re welcome Carolann! Georgia LLC’s with 2 or more members cannot be taxed like a Sole Proprietorship. Instead, you would elect Partnership taxation as the default tax status with the IRS. Alternatively, your LLC can elect C-Corporation or S-Corporation tax status with the IRS, but the pros and cons will be unique to your situation, and would be too detailed to list out here. We recommend speaking with an accountant (or a few) re: Partnership vs. Corporation tax status for your LLC. Hope that helps!

      reply
  3. Shelli December 27, 2017

    That Operating Agreement example seems to be way too complicated – can you put some information on what the terms mean and how we find out if they are needed?

    reply
    • Matt Horwitz December 29, 2017

      Hi Shelli, thank you for your comment and feedback. We have some guides we are working on to make the Operating Agreements easier to understand. It won’t be out right away, but in the meantime, I recommend printing out the Operating Agreement and reading a page or two each day. In a few days, it won’t feel so overwhelming. Apologies we don’t have the new content available right now, but it’s on our list. Thanks again :)

      reply
      • Ashley January 7, 2018

        I was actually going to say the same thing. I had a hard time with both the Articles and the Operating Agreement. It’s just that there’s no explanation of how to fill everything in correctly.

        reply
        • Matt Horwitz January 15, 2018

          Hi Ashley, thank you for your comment. Were you able to follow along in the video instructions? Each blank area in the Operating Agreement was discussed, but I do see what you mean… there’s not a lot explanation. We’ll make sure to do that when we revamp our video instructions. However, the Articles of Organization information in our other lesson does explain everything. Is there anything top of mind you’d like more clarity on?

          reply
  4. Roj January 30, 2018

    Hello Matt,

    I opened my business in Georgia almost 2 months ago, but we didn’t start to work yet. I already applied for name and EIN, all documents approved, it will be import-export Company, Could you please advise if we need additional documents or license? Also Do I need to contact with Irs for tax form ,process..?

    Thank you

    reply
    • Matt Horwitz January 31, 2018

      Hi Roj, we do not provide one-on-one services explaining which licenses and permits each business needs. We deals with hundreds of businesses and there are over 20,000 licensing jurisdictions in the United States. Having said that, you can find helpful information and resources on this page of our website. I do not understand your question about the IRS. If I read it correctly however, no, you don’t need to contact the IRS for forms. You can certainly download forms from their website though. I recommend hiring an accountant for help with your taxes. Thanks.

      reply
  5. Steven February 17, 2018

    I am forming a Florida LLC for the purposes of buying and managing real estate. I want to put my nephew as a member but not manager…I also am putting in 100percent of the initial investment…So his name should not appear anywhere on the Articles of Organization? My name and address only as registered agent Article III and my Name and address as MGR Article IV? The percent issue and naming him as member is done in the Operating Agreement?

    reply
    • Matt Horwitz February 21, 2018

      Hi Steven, yes, that is correct. If you are aiming to keep his name off of the Florida Articles of Organization, you can do so as you’ve mentioned (by just listing yourself as the Manager) and then listing you and him in the Operating Agreement. This sounds like it’ll be a Manager-managed LLC. If that’s the case, I just emailed you a Manager-managed Operating Agreement. Hope that helps.

      reply
  6. Domonique March 1, 2018

    Thank you for this information. My question is do I need to fill out the Articles of Organization if I am the sole proprietor of the LLC? I am located in the state of Georgia.

    reply
    • Matt Horwitz March 2, 2018

      Hi Domonique, I would avoid using the phrase “sole proprietor of the LLC”. Instead, you are a Member (owner) of the LLC. And the IRS treats your LLC as a Sole Proprietorship for tax purposes. So your question, “Do I need to fill out the Articles of Organization?” I bolded “fill out” for context. You don’t need to fill out the Articles of Organization, as in, you don’t need to be the person completing the form. You also don’t need to be the LLC Organizer (the person signing the form). Yyou could hire someone to fill it out for you, or you could have a friend be the LLC Organizer. But I think you’re asking, “As the owner of the LLC, does my name need to appear on the Articles of Organization?” If that is your question, the answer is no, LLC Members do not need to be listed on the Georgia Articles of Organization. LLC Members will be kept “internal” and be listed in the LLC’s Operating Agreement. Hope that helps :)

      reply
  7. Jason Stewart February 6, 2019

    Hi Matt, thank you for this video series.
    To preface this question, my wife and I are starting an LLC and will be 50/50 but will potentially operate out of separate d.b.a.’s or trade names.
    From what I’m understanding from your videos when filling out the LLC form online you can leave the optional provisions blank, as in you do not need to include the LLC members and percentage breakdowns. Is that correct?

    Also, if that is true, then it looks like you enter all of that info in the Operating Agreement, which does not need to be submitted to the state. Is that correct?

    Lastly, how do you process the different d.b.a.’s/trade names? I believe I need to do that with the county but in addition to that is there a way to incorporate that into the Operating Agreement? And, can two members of an LLC be 50/50 of the LLC but have different percentages in the d.b.a.? As in, I run one d.b.a. and receive 100% of management and my wife runs another and receives 100% of management to that.

    Thanks for any help, I hope this is clear.
    Jason

    reply
    • Matt Horwitz February 12, 2019

      Hi Jason, you’re welcome. Glad they’ve been helpful. Yes, you’re correct. The Georgia LLC Articles of Organization doesn’t ask for Member info. And yes, the Operating Agreement is an internal document and isn’t filed with the state. From a technical standpoint, the DBAs are just nicknames for your LLC, so it’s still just one entity. However, if you want to run certain business activities and your wife wants to run other business activities, that’s certainly up to your discretion. You can add a section or an attachment to your Operating Agreement if you’d like to list out your DBAs. In order to file DBAs for your LLC, that would be done once your LLC is approved. Then you’ll need to reach out to the Clerk of Superior Court in the county where your LLC is located. In Georgia, DBAs are filed at the county level. Hope that helps.

      reply

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