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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.
Here is a Member-managed Operating Agreement template available in 3 formats. This can be used for a Single-Member LLC or a Multi-Member LLC.
A Member-managed LLC is where all the Members (LLC owners) have the ability to legally bind the LLC in contracts and agreements. The LLC Members also run the business and day-to-day operations.
Here is a Manager-managed Operating Agreement template available in 2 formats. This can be used for a Single-Member LLC or a Multi-Member LLC.
A Manager-managed LLC is where one or more designated people (called Managers), have the ability to legally bind the LLC in contracts and agreements. The LLC Manager(s) also run the business and day-to-day operations.
The Members can't legally bind the LLC in contracts and agreements. They also don't take part in running the business and day-to-day operations. Instead, they take a passive/investor role.
However, the Members vote the Manager(s) into their position and are required to vote on certain things, like adding or removing an LLC Member.
Which one should I choose? It depends on how you want your LLC to be managed. Please see Member-managed vs Manager-managed LLC for more details. If you’re not sure which one to use, we recommend using the Member-managed Utah Operating Agreement template. This is the most common type of LLC management.
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:
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.).
Note: Some people make the mistake of saying they are “shareholders” of an LLC. This isn’t accurate. The terms “shares” or “shareholders” do not exist when talking about LLCs. The term “shares” specifically refers to ownership in a Corporation.
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.
You will list how your LLC will be taxed in your Operating Agreement. There are four common ways an LLC can be taxed:
Note: Husband and wife LLCs can sometimes be taxed as a Qualified Joint Venture LLC. To do this, the LLC must be formed in a community property state. Utah is not a community property state though, so this type of tax treatment isn’t available for Utah LLCs.
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).
Once you finalize your Operating Agreement, make sure all Members have a copy.
And keep a copy of it with your LLC business records.
$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:
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, but we recommend using an Operating Agreement template.
An Operating Agreement is a legal document. You don’t have to hire an attorney to write one, though. Using a template helps make sure you cover everything you need to.
LLC University® offers free Operating Agreement templates that you can download and customize to write your own LLC Operating Agreement.
Matt Horwitz is the leading expert on LLC education, and has been teaching for 15 years. He founded LLC University in 2010 after realizing people needed simple and actionable instructions to start an LLC. He's cited by Entrepreneur Magazine, Yahoo Finance, and the US Chamber of Commerce, and was featured by CNBC and InventRight.
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.
