Member-Managed
Operating Agreement Template
(Default)
$35
Template for Georgia Single-Member, Member-Managed LLCs taxed under the default status.
Member-Managed
Operating Agreement Template
(S Corp)
$35
Template for Georgia Single-Member, Member-Managed LLCs taxed as an S Corporation.
Manager-Managed
Operating Agreement Template
(Default)
$35
Template for Georgia Single-Member, Manager-Managed LLCs taxed under the default status.
Manager-Managed
Operating Agreement Template
(S Corp)
$35
Template for Georgia Single-Member, Manager-Managed LLCs taxed as an S Corporation.
Member-Managed
Operating Agreement Template
(Default)
$35
Template for Georgia Multi-Member, Manager-Managed LLCs taxed under the default status.
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Do you need an operating agreement in Georgia?
No, it's not legally required in Georgia under § 14-11-101. Single-member LLCs need an operating agreement to preserve their corporate veil and to prove ownership. And multi-member LLCs need one to help provide operating guidance, determine voting rights and contributions.
Read on to learn more about Georgia operating agreements, including:
What's included in a Georgia operating agreement?
Here are some key components that are typically included in a Georgia LLC operating agreement:
-
Name and Purpose
-
LLC Management - Member or Manager
-
Registered Agent
-
LLC Duration
-
Capital Contributions
-
Indemnification
-
LLC Tax Status
-
Profit and Loss Distributions
-
Amending your LLC
-
Corporate Formalities Waiver
-
Dissolution
-
Effective Date
Step-By-Step Guide for Creating an Operating Agreement
Let's break down the usual sections and provide some explanation for each to guide you.
1. LLC Name and Purpose
At this stage, you'd already be familiar with your LLC’s name (the one you used for your LLC formation filing). Alongside that, you’ll want to clearly state the purpose of your LLC. A general description works well here, as it grants you the liberty to embrace new opportunities without amending your filing.
OPERATING AGREEMENT of [COMPANY NAME]
This operating agreement is adopted as of [Date] (the “Effective Date”), by [Member’s Name], an individual and the sole member (the “Member”) of [Company Name] (the “Company”).
The Member hereby adopts this agreement as the operating agreement of the Company, which agreement sets forth the entire understanding of the Member regarding its subject matter and supersedes all prior understandings and agreements regarding its subject matter.
The purpose of the Company is [Company Purpose], and the conduct of other activities as may be necessary or appropriate to promote the stated purposes, and to engage in any other lawful business or activity for which a limited liability company may be organized under the Act.
2. Management Structure - Member-Managed or Manager-Managed
Here’s where you specify whether your LLC is member-managed or manager-managed and outline each member's rights and obligations, including capital input, voting privilege, and leadership structure. Even if you’re flying solo, don't skip this section. It’s vital in establishing your single-member LLC.
Member-Managed LLC.
The business and affairs of the Company will be managed by the Member. The vote, action, decision, or consent of the Member will constitute a valid decision of the Member and the Company. The Member may appoint one or more officers (including the Member, if the Member is an individual) who will have such powers and authority to act on behalf of the Company granted to them by the Member.
OR
Manager-Managed LLC.
The business and affairs of the Company will be managed by the manager of the Company and any successor thereto appointed by the Member, which manager may also be referred to as the Company’s president (the “Manager”). The initial Manager will be [Manager Name], who will serve until the Manager’s death, removal by the Member (for any reason or no reason), or resignation. The Manager will have the right and authority to manage the affairs of the Company and make decisions and take action with respect thereto without further approval or consent of any kind by the Member. Except as otherwise required by this agreement and in lieu of any limitations set forth in [State Name]’s laws for limited liability companies (the “Act”), the Manager will be solely responsible for and is hereby authorized to manage and operate the business of the Company. Except to the extent that the authority of the Manager is expressly limited by the Member, the vote, action, decision, or consent of the Manager will constitute a valid decision of the Manager and the Company.
3. Registered Agent
Your registered agent is the person who will receive and handle critical documents on behalf of your company. While optional in many LLC operating agreements due to listing in your formation documents, there’s no harm in being extra careful - you could always include it in your agreement.
The Company’s registered agent in State is: Registered Agent Name, Address. The members may designate other registered agents or offices at any time in this state or, if necessary, in other states.
4. Duration of Your LLC
Your LLC's term refers to its intended lifespan, as outlined in your formation documents. Most entrepreneurs aim for their LLC to run indefinitely, but it's also possible to set a fixed timeframe or end date.
Typically, LLCs are seen to be "perpetual" by default—that is, they can exist for as long as you intend for them to. This is usually the preferred duration choice of most Georgia LLCs. Here's a sample statement for this:
The duration of the Company will be perpetual.
5. Capital Contributions
Capital contributions refer to the resources—funds, property, or services—that you invest into your LLC to start its operations. Think of it as your initial capital injection. For single-member LLCs, your capital contributions can entirely be from you as the only owner, granting you the flexibility to decide the magnitude of your initial investment.
Make sure to document your capital contributions appropriately. This creates a stark picture of your enterprise's financial framework and provides crucial details for tax considerations.
The Member’s capital contribution(s) to the capital of the Company for the Member’s membership interest in the Company will be reflected on the books and records of the Company.
OR
The members have made or shall make the contributions of cash, property or services to the LLC as set forth on Exhibit A attached
6. Indemnification
An indemnification clause safeguards the members of your LLC from bearing certain costs associated with potential legal problems stemming from their roles in the company. Should a member be sued for their work for the company, indemnification implies the LLC covers any legal expenses or harm.
Your agreement should lucidly define under what circumstances and when the LLC offers this protection, including whatever exceptions apply. Most of the time, indemnification will not cover intentional misconduct or serious negligence. Therefore, it’s crucial to tailor the terms according to your business' unique risks to ensure sufficient protection.
The Member, the Manager, the officers, and the organizer of the Company and their respective affiliates, stockholders, members, managers, directors, officers, partners, employees, agents, trustees, and representatives (individually, an “Indemnitee”) will be indemnified by the Company against any and all losses, claims, damages, liabilities, expenses (including legal fees and expenses), judgments, fines, settlements, and other amounts arising from any and all claims, demands, actions, suits, or proceedings, civil, criminal, administrative, or investigative, in which the Indemnitee may be involved, or threatened to be involved, as a party or otherwise by reason of the Indemnitee’s status as any of the foregoing, which relates to or arises out of the Company or its assets, business, or affairs, if in each of the foregoing cases (A) the Indemnitee acted in good faith and in a manner the Indemnitee believed to be in, or not opposed to, the best interests of the Company, and, with respect to any criminal proceeding, had no reasonable cause to believe the Indemnitee’s conduct was unlawful, and (B) the Indemnitee’s conduct did not constitute gross negligence or willful or wanton misconduct. The termination of any action, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere, or its equivalent, will not, of itself, create a presumption that the Indemnitee acted in a manner contrary to that specified in clause (A) or (B) above. Any indemnification under this section 5 will be made only out of the assets of the Company, and the Member will not have any personal liability on account thereof.
Member-Managed
Operating Agreement Template
(Default)
$35
Template for Georgia Single-Member, Member-Managed LLCs taxed under the default status.
Member-Managed
Operating Agreement Template
(S Corp)
$35
Template for Georgia Single-Member, Member-Managed LLCs taxed as an S Corporation.
Manager-Managed
Operating Agreement Template
(Default)
$35
Template for Georgia Single-Member, Manager-Managed LLCs taxed under the default status.
Manager-Managed
Operating Agreement Template
(S Corp)
$35
Template for Georgia Single-Member, Manager-Managed LLCs taxed as an S Corporation.
Member-Managed
Operating Agreement Template
(Default)
$35
Template for Georgia Multi-Member, Manager-Managed LLCs taxed under the default status.
Get access to all our operating agreements, 100+ other important contract templates, and a step-by-step, interactive platform that will help you build a solid legal foundation for your business. All included in Legal GPS Pro.
7. LLC Tax Status
Your Georgia LLC can be taxed under one of four structures: as a sole proprietorship, a partnership, an S corporation, or a C corporation. The tax status your LLC falls under depends on the number of members and the taxation preference your business opts for with the IRS.
Include sections about your LLC's tax status in your operating agreement. These sections should cover your chosen tax status, how it can be changed, how tax returns, and resources allocations (where applicable) will be handled. This helps your LLC have a plan for managing its finances, including profits, losses, dividends, and taxes. A clear plan of action for tax-related issues mitigates any future confusion.
The Company will be disregarded for federal and state income tax purposes. The admission of one or more additional members, however, will cause the Company to be recognized for tax purposes, and to be taxed, as a partnership.
OR
The Member acknowledges that the Company has elected to be taxed as a corporation for federal tax purposes pursuant to the regulations currently in effect under Section 7701 of the Code, and to be taxed as an electing small business corporation under the provisions of Subchapter S of the Code. Notwithstanding such tax treatment, the Member acknowledges and agrees that the Company will be a limited liability company, for state law purposes, under the provisions of the Act, the Articles of Organization, and this operating agreement.
The Member acknowledges that the Company has filed or will timely file a Form 2553 (Election by a Small Business Corporation) with the Internal Revenue Service and that the election made pursuant to the filing is or will be in force and effect covering all periods since the date of this operating agreement. Except as otherwise provided in this operating agreement, during the term of this operating agreement and the continuation of the Company’s “S” corporation election under Section 1362 of the Internal Revenue Code, no Member shall take any action which would cause the revocation or termination of the Company’s “S” election (under Section 1362(a) of the Internal Revenue Code) and any attempt to take such an action will be null and void and without effect. Without limiting the foregoing, and notwithstanding any provision hereof to the contrary, any transfer or attempt to transfer any membership interest to any of the following will be null, void, and without effect:
(a) a person whose ownership thereof would cause the Company to have a number of Members and assignees of membership interests (shareholders of an “S” corporation) greater than the number permitted by Section 1361(b)(1)(A) of the Internal Revenue Code;
(b) an individual who is not a United States citizen or resident;
(c) a trust (or the trustee thereof) which fails to satisfy the requirements of Section 1361(c)(2)(A) or 1361(d) of the Internal Revenue Code;
(d) a corporation; and
(e)any other entity whose ownership would cause the termination or revocation of the Company’s tax status as an “S” corporation.
8. Distribution of Profits and Losses
This clause outlines when your LLC will distribute the money it generates. For single-member LLCs, this isn't much of a concern. But if you are a part of a multi-member LLC, ensure to specify when, under what prerequisites, and how distributions will occur.
As the sole member of the LLC, the Member is entitled to all profits of the LLC and is responsible for all its losses. Profits and losses shall be determined annually and will be allocated to the Member's capital account. Distributions of cash or other assets will be made at such times and in such amounts as deemed appropriate by the Member.
9. Agreement Amendments
So, what's the procedure when you need to modify any term within your LLC? Simply follow your LLC amendment clause. For single-member LLCs, it's quite straightforward. But for multi-member LLCs, focusing on voting percentages and the necessary requirements for amendment is recommended.
This agreement and the articles of organization of the Company may not be altered, modified, or changed, and no provision of this agreement may be waived, except by an amendment or waiver, as applicable, approved by the Member.
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10. Corporate Formalities Waiver
LLC's, inherently, are not subjected to follow corporate formalities. This rule typically applies to corporations. However, if these formalities are not followed in certain cases, it might hamper the maintenance of your corporate veil. Therefore, it’s a wise decision to include a waiver of all formalities in your operating agreement for precautionary reasons.
The failure of the Company or the Member to observe any formalities or requirements relating to the exercise of its powers or management of its business or affairs under this operating agreement or the laws in the state in which the Company is which govern limited liability companies will not be grounds for imposing personal liability on the Member for liabilities of the Company.
11. Dissolution
The dissolution clause is your plan B—what to do when things don't sail smoothly. This section guides you on how to dissolve your LLC, dictating who will maintain control should your role in the LLC conclude prematurely.
Upon the occurrence of any event which terminates the continued membership of the Member in the Company, the Company will not be dissolved, and the business of the Company will continue. The Member hereby specifically consents to such continuation of the business of the Company upon any such event. The Member’s legal representative, assignee, or successor will automatically become an assignee of the Member’s interest and will automatically become a substitute Member in place of the withdrawn Member.
12. Effective Date
The 'effective date' of your operating agreement is the day it springs into action—it's the day the agreement "becomes operative."
Do you need to formally file your Agreement?
Nope! Just like your Articles of Organization (or as some states term it, the Certificate of Formation), your operating agreement is an internal company document, which you keep within your enterprise's records. Just affix your signature and maintain a copy that could be readily accessed.
What If You Need to Add Another Member to Your LLC Later?
Expansion is a common goal among small business owners. If you find yourself in that exciting position and are prepared to welcome another member to your LLC, you will need to revise the above paperwork following the agreement between you and the new member. Chances are, you will likely need to draft a completely different agreement, as a multi-member operating agreement markedly differs from a single-member operating agreement.
Georgia LLC Operating Agreement Laws
- Georgia Code § 14-11-101: In Georgia, it isn't obligatory to have an Operating Agreement for your LLC. However, an Operating Agreement is highly recommended because it can help govern the LLC's business, guide its financial and working relations among the LLC, members, and managers, and show lenders the members' seriousness about their business.
- Georgia Code § 14-11-202: A Limited Liability Company, or LLC, formed in this state has flexibility to act pretty much like a person. Essentially, the law gives your LLC the green light to do whatever is necessary to achieve its purpose and manage its business. It's like your LLC has its own passport to explore any legal activities necessary to succeed. As long as your business activities align with your LLC's purpose, you're empowered to carry on your business and affairs just like an individual would! Cheers to your entrepreneurial journey.
- Georgia Code § 14-11-301: provides that every member of a Limited Liability Company (LLC) is an agent and their actions bind the LLC unless the member lacks authority to act for the LLC in the particular matter. However, if the articles of organization dictate that LLC management rests with a manager, then members are not agents, but every manager is an agent, and their actions bind the LLC unless they lack authority. Actions by managers or members that are not for the business do not bind the LLC unless there is written authorization. Violations of authority restrictions don't bind the LLC if people are aware of the restriction.
- Georgia Code § 14-11-303: This section details the "Liability to Third Parties." A member or manager of an LLC is not personally liable for the debts, obligations, or liabilities of the LLC solely by reason of being or acting as an LLC member or manager.
- Georgia Code § 14-11-602: This statute addresses the "Winding Up of Limited Liability Company's Activities." The affairs of the company need to be wound up and the company's assets distributed upon the occurrence of various events which are laid out in this code section.
Member-Managed
Operating Agreement Template
(Default)
$35
Template for Georgia Single-Member, Member-Managed LLCs taxed under the default status.
Member-Managed
Operating Agreement Template
(S Corp)
$35
Template for Georgia Single-Member, Member-Managed LLCs taxed as an S Corporation.
Manager-Managed
Operating Agreement Template
(Default)
$35
Template for Georgia Single-Member, Manager-Managed LLCs taxed under the default status.
Manager-Managed
Operating Agreement Template
(S Corp)
$35
Template for Georgia Single-Member, Manager-Managed LLCs taxed as an S Corporation.
Member-Managed
Operating Agreement Template
(Default)
$35
Template for Georgia Multi-Member, Manager-Managed LLCs taxed under the default status.
Get access to all our operating agreements, 100+ other important contract templates, and a step-by-step, interactive platform that will help you build a solid legal foundation for your business. All included in Legal GPS Pro.