What’s the difference between an LLC Operating Agreement and Membership Agreement?

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Quick Reference

Question – I’ve researched this but can’t tell if there is a difference between an LLC Membership Agreement and an LLC Operating Agreement.

Our Answer – 

There isn’t a difference.

An Operating Agreement is the commonly used name, through some refer to it as a Membership Agreement. This is a document that establish the rules, regulations and key financial guidelines for an LLC.

There are only five states that require an Operating Agreement (California, Delaware, Maine, Missouri, Nebraska and New York). The requirements are pretty weak as some states allow verbal agreements. If you are going to prepare an agreement, make sure it is written!

Even though a majority of states don’t require an LLC to have one, it’s a good idea especially for a multi-member LLC. The Operating Agreement is in place to make sure everyone understands the rules of how the entity will operate and keep disputes at a minimum. While it’s not a bad idea to have one as a single-member LLC, it’s less likely to have a dispute when you are the only member.

We have more information about when an LLC needs an Operating Agreement and Operating Agreement Templates.

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