Multi-Member LLC Operating Agreement Guide — Washington

Start with the basics: your LLC's legal name, its principal business information (such as its address and what it does), and the names of all LLC members. This identifies exactly who and what the agreement covers.

Clearly identify each member's ownership percentage — the share of the business each owner holds.

Document what each member contributes to the business — money, property, equipment, or other agreed contributions. Writing these down early prevents later disagreements about who put in what.

Your agreement should say who runs the business. In a member-managed LLC, all owners share responsibility for day-to-day decisions. In a manager-managed LLC, the members designate one or more managers — who may or may not be members — to run the business while the other owners stay out of daily operations.

Establish how votes work — for example, whether each member gets one vote or votes are weighted by ownership percentage — and which decisions require a majority versus unanimous approval. Bigger decisions, like taking on significant debt or admitting a new member, are often the ones members want to require broader agreement on.

Explain how profits, losses, and distributions will be handled among members — whether they follow ownership percentages or another agreed arrangement, how often distributions are paid, and whether some profits stay in the business.

Document each owner's authority, responsibilities, and limitations — who can sign contracts, commit the business to obligations, or spend money on its behalf, and which actions require the group's approval first.

Establish how another owner can be admitted to the LLC — what approval is required, what the new member must contribute, and how existing ownership percentages change if someone joins.

Address voluntary withdrawal, buyouts, how an ownership interest will be valued, and transfer restrictions — for example, whether a member can sell their share to an outside buyer or must first offer it to the other members.

The owners should decide in advance what happens to an ownership interest if a member dies or becomes unable to participate — whether it passes to heirs, is bought out, or is handled some other way. Deciding now is far easier than sorting it out during a difficult time.

Encourage members to establish procedures for handling disputes and deadlocked votes — such as cooling-off periods, mediation, or tie-breaking rules — so a disagreement doesn't stall the whole business.

Explain how the members will decide to dissolve the LLC, and how any remaining assets are distributed once the business's obligations have been handled.