Every Utah LLC should have an Operating Agreement, but getting one doesn’t have to be expensive. You can download and customize your own Operating Agreement for free using our template below.
Utah LLC Operating Agreement (Member-managed)
Utah LLC Operating Agreement (Manager-managed)
What is a Utah LLC Operating Agreement?
A Utah LLC Operating Agreement is a written contract between the LLC Members (LLC owners). This legal document includes detailed information about LLC ownership and how the LLC is managed.
Single-Member LLCs and Multi-Member LLCs should prepare a written Operating Agreement, keep it with their business records, and give a copy to all Members.
Your Operating Agreement will include basic information about your Limited Liability Company. Some of the information will be the same as what is listed in your Utah LLC Certificate of Organization. Operating Agreements should include:
- LLC Name
- LLC effective date
- Utah Registered Agent
- purpose of your LLC
- duration of your LLC
- and how your LLC will be taxed
Related Reading: Is a Registered Agent a Member of an LLC?
LLC Ownership (“LLC Membership Interest”)
Your Operating Agreement will list all the LLC Owners (Members) and how much of the LLC they each own.
How much of the LLC someone owns is called their “LLC Membership Interest“.
LLC Membership Interest is most often expressed as a percentage (like 5%, 50%, 100%, etc.).
Initial Capital Contributions (putting money into your LLC)
After your LLC is approved, you should open an LLC bank account and put money into that account.
Each Member of the LLC makes an initial capital contribution. Capital contribution simply means a deposit of money into the LLC bank account.
You will list the initial capital contributions in your LLC’s Operating Agreement.
Pro tip: If you complete your Operating Agreement before you have opened an LLC bank account, just enter the amount the Members plan to deposit. If the amount of your deposit changes, it’s okay to edit your Operating Agreement later with the actual amounts.
- Related article: To learn more about capital contributions, like how much you should contribute, check out LLC Capital Contributions.
Statement about taxes
You will list how your LLC will be taxed in your Operating Agreement. There are four common ways an LLC can be taxed:
- LLC taxed as a Sole Proprietorship
- LLC taxed as a Partnership
- LLC taxed as an S-Corporation
- LLC taxed as a C-Corporation
Voting Rights of LLC Members
The rules of membership voting will be spelled out in your Utah LLC’s Operating Agreement.
If you use the Member-managed Operating Agreement, the voting powers are proportionate to the LLC Membership Interest.
If you use the Manager-managed Operating Agreement, the voting powers are also proportionate to the LLC Membership Interest. Then the Members vote to elect a Manager or Managers. The Manager(s) then has authority to make certain decisions on behalf of the LLC (without needing a vote by the Members).
However, certain things, like adding a new Member or removing an LLC Member, require a vote of the Members (and the Manager has no say).
Make sure all Limited Liability Company Members have a copy
Once you finalize your Operating Agreement, make sure all Members have a copy.
And keep a copy of it with your LLC business records.
Operating Agreement FAQs
How much does an Operating Agreement cost?
$0. Our LLC University® Operating Agreement templates are totally free to download and use.
If you hire a company to form your LLC, it depends. Some companies include an Operating Agreement template for free. Other companies sell you an Operating Agreement for around $100.
But you don’t have to pay the extra fees! You can use our templates even if you hire a company to file your LLC Articles of Organization.
Does a Single-Member LLC need an Operating Agreement?
It’s best to have an Operating Agreement, even if you are the sole Member of your Utah LLC (a Single-Member LLC).
If you go to court, an Operating Agreement helps prove that your Single-Member LLC is being run as a separate legal entity. That confirms the company’s limited liability status, and that is what protects your personal assets.
Does a Multi-Member LLC need an Operating Agreement?
It’s best to have an Operating Agreement, especially for a Multi-member LLC. This document spells out ownership percentages, operating procedures, profit distribution, and management structure.
If you go to court, an Operating Agreement helps prove that your Multi-member LLC is being run as a separate legal entity.
Is an Operating Agreement required for an LLC in Utah?
While it’s not legally required to conduct business in Utah, we strongly recommend having an Operating Agreement for your LLC.
Additionally, banks and other organizations may need to see a copy of your Operating Agreement in order to do business with them.
Do I have to send my LLC Operating Agreement to the state?
No, you don’t have to send your Operating Agreement to the Division of Corporations and Commercial Code, the Utah Department of Commerce, your Registered Agent, the Internal Revenue Service, or any other government agency.
An Operating Agreement is an “internal document”. Meaning, the Members just need to keep a copy with their business records.
The Operating Agreement is a legally binding document upon the Members because of the Members’ signatures. It doesn’t need a government stamp of approval.
However, in the future, if you were involved in a lawsuit or an audit, a court or government agency might ask to see a copy of your Operating Agreement.
Additionally, you may also need to show your Utah LLC’s Operating Agreement to:
- a bank when you open a business bank account
- a lender if you apply for a loan for the LLC
- a title company if your LLC is buying real estate
Does an LLC Operating Agreement need to be notarized?
No, your Operating Agreement doesn’t need to be notarized. Each Member just needs to sign the Operating Agreement.
Once you (and the other LLC Members, if applicable) sign the Operating Agreement, then it becomes a legal document that governs your Utah business.
Can I write my own Operating Agreement?
Yes. You can draft an Operating Agreement yourself, or you can complete a template. You don’t have to hire a lawyer or a company to create one for you.
However, if your LLC has a complicated ownership structure or other unusual features, you might want to get legal counsel. A business attorney can draft a custom Operating Agreement for you, or you can hire one to look at the one you’ve written and give you legal advice.
Matt holds a Bachelor's Degree in business from Drexel University with a concentration in business law. He performs extensive research and analysis to convert state laws into simple instructions anyone can follow to form their LLC - all for free! Read more about Matt Horwitz and LLC University.