Question: I am the sole member of my Arizona limited liability company. Should I sign an Operating Agreement for my LLC?

Answer: Although Arizona LLC does not require that the members of an Arizona LLC sign an Operating Agreement, as an Arizona LLC attorney I highly recommend that all members of an Arizona LLC, including single member LLCs, sign a “good” Operating Agreement. A good Operating Agreement is a document that is drafted specifically to comply with Arizona’s LLC law and that contains provisions and language needed by most LLCs and their members. The fact the members of an LLC sign an Operating Agreement could actually be detrimental to the members if the Operating Agreement is poorly written or not written specifically to comply with Arizona LLC law.

There are several reasons why the sole member of an LLC should sign an Operating Agreement:

  • Some banks require an Operating Agreement signed by the sole member before opening a bank account in the LLC’s name.
  • If the LLC will ever buy or sell real property the title insurance / escrow company will require an Operating Agreement signed by the sole member.
  • If the LLC were to borrow money the lender will require an Operating Agreement signed by the sole member
  • When courts are asked to pierce the company veil and hold the sole member liable for the debts of the LLC one of the factors that counts against the member is the lack of an Operating Agreement. If you don’t have a signed Operating Agreement it tells the judge and jury that you are treating your LLC like a hobby rather than a business. Businesses have signed Operating Agreements signed by their owners.
  • To set the rules that govern the operation of the company if the sole owner were to die and his or her interest is inherited by one or more loved ones.

A good Operating Agreement is a complex document that should cover a lot of important ground. It should be drafted by an experienced LLC attorney licensed to practice in the LLC’s state of formation. As a business lawyer who has practiced law in Arizona since 1980 I’ve prepared 6,700+ Operating Agreements and spent hundreds of hours researching and revising my Operating Agreement.

How to Hire Arizona LLC Attorney Richard Keyt to Prepare an Operating Agreement

To hire Richard Keyt to prepare an Operating Agreement for your sole member Arizona or California LLC for $297 complete and submit his online Operating Agreement Questionnaire.