Connecticut LLC Operating Agreement (Guide + Free Template)

Atty. Danya Shakfeh
Published by Atty. Danya Shakfeh | Author
Last updated: May 16, 2024
FACT CHECKED by Lou Viveros, Growth & Transition Advisor
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If you've already established a Connecticut LLC, it’s highly advisable to draft an operating agreement and keep it internally when running your LLC.

To help you understand the fundamental elements of an operating agreement, we assembled a team of seasoned LLC lawyers with over fifteen years of experience and dedicated three weeks to in-depth research to outline the steps you can take when drafting one.

Here's everything you'll need to know about the Connecticut LLC operating agreement.

Quick Summary

  • A Connecticut operating agreement is an internal legal document that covers the rules and structure of the LLC.
  • You need an operating agreement to open a business bank account, protect limited liability status, provide proof of ownership, and set your own LLC rules.
  • It's common practice for over 80% of Connecticut LLCs, especially multi-member LLCs, to adopt operating agreements to ensure clarity in management and operations.
  • In my practice, I recommend regularly reviewing and updating your Connecticut operating agreement to reflect any significant changes in the business structure or operations.

Connecticut LLC Operating Agreement Free Template

Download Member-Managed LLC Operating Agreement
Download Manager-Managed LLC Operating Agreement

Disclaimer: This template is offered for informational purposes only and is not intended as legal advice. We highly advise consulting a qualified attorney to confirm its suitability and accuracy for your specific needs. We assume no responsibility for any consequences arising from the use of this template.

We recommend reading our comprehensive article on the essential differences between member-managed and manager-managed LLCs before downloading our template.

What Is a Connecticut LLC Operating Agreement?

Two business men having a conversation about LLC operating agreement

A Connecticut LLC operating agreement is a legal document that establishes the guidelines and organization of your Connecticut LLC.

Operating agreements regulate key facets of the company, like ownership, voting rights, finances, and management.

A single-member operating agreement declares that you are the sole member and have complete control over all business decisions for the LLC.

For limited liability companies with multiple members, the operating agreement cohesively details the percentage of ownership and management between all business members.

In Connecticut, LLCs are not required to submit an operating agreement at the time of its establishment.

Because of this, there is no filing fee for this document. However, you should finish this agreement while your LLC files its Certificate of Organization with the state [1].

"Each LLC member should receive a signed copy of the operating agreement and another kept internally with the company records."
- US Securities and Exchange Commission 

How to Write a Connecticut Operating Agreement?

To write a Connecticut operating agreement, you must gather all LLC and members' information or seek an attorney's expertise to draft it on your behalf.

Below is a step-by-step guide for writing an operating agreement in Connecticut:

1. Outline Ownership

A man in his office working on important documents

The first step in drafting an operating agreement is to define its ownership structure.

Typically, the amount of money each member invested to form the LLC determines the ownership portion. However, some LLCs assign equal ownership to each member for simplicity.

The ownership structure also details the equity structure, which includes the equitable division of earnings, losses, and distributions among members, which is also up to the owners.

Your LLC's operating agreement should specify how members will split earnings and losses and their respective interests, contributions, and capital accounts.

2. Specify Management Structure

The next step is to state the LLC's management structure. Deciding how the LLC will be managed is an essential consideration. It may be managed by members or by managers.

Once the structure is determined, the next step is to establish the scope of management's decision-making power.

Managers often have day-to-day control over the firm's normal operations, while more mission-critical decisions like dissolving the company will need member consent. 

3. Issue Rights, Duties, and Compensation

You, your business partners, and your members will also want to communicate your rights and obligations. This includes anything from compensation to duties and role expectations to voting rights.

The function of each member or partner in the company and their influence over choices that affect the company and other members should be clearly outlined in this section of the document.

4. Define Buyout and Transfer of Membership

A man working on important papers

A buyout in the agreement should specify the value of the member's ownership interest and how payment will be made.

To safeguard the company's intellectual property, some LLCs may even have restrictions prohibiting competitors from hiring them or requiring confidentiality.

Describe the steps and conditions for members to sell, give up, or buy out their membership interests, together with any first-mover advantages and valuation techniques.

5. Layout Terms of Dissolution

An operating agreement must cover the possibility that LLC members could want to end the firm at some point. The agreement should detail the events leading to a wind-up and how the assets will be distributed.

6. Add a Severability Provision

Two guys having a discussion in an office

As you're finalizing the drafting process, add a severability clause.

A severability statement stipulates that all other operating agreement provisions that do not conflict with the law should still apply if one of them turns out to be illegal under state or federal law.

The LLC assures that any minor errors won't render the entire contract void by incorporating a severability clause.

Why Do You Need an LLC Operating Agreement in Connecticut?

You need an LLC operating agreement in Connecticut to show the LLC's ownership and protect your LLC status.

Below are the key reasons why you need an operating agreement for your Connecticut limited liability company: 

Regulate Internal Conflict

A man and a woman having a business discussion

An operating agreement can regulate internal conflict among parties in an LLC.

This is because each owner's contributions to the firm, their share of earnings, and their obligations to the company and other members are spelled out in the operating agreement.

If a misunderstanding arises, the members can refer to the operating agreement to prevent minor conflicts.

Sets Out LLC Rules

The management of LLCs, the admission of new members, the dissolution of LLCs, and other areas of LLC governance are governed by default laws approved by every state.

The default law governing LLCs in Connecticut is Connecticut's Uniform Limited Liability Company Act [2].

If an LLC operating agreement is absent, this state's default laws will take effect. That's why an entity needs its own LLC operating agreement to circumvent its regulations.

Secure Limited Liability Status

Two individuals having a business conversation

An LLC must demonstrate that the company is a distinct legal entity from its owners.

This makes it more likely that legal claimants and creditors will only be able to seize the business's assets and not the owners' assets.

Given this, an operating agreement should record all the LLC's guidelines to maintain its limited liability protection.

Proof of Ownership

An LLC operating agreement contains all the names and addresses of members and managers of the entity.

With this, an LLC can use its operating agreement to prove ownership, especially when opening a business bank account or acquiring property.

FAQs

Does Connecticut Require an Operating Agreement for an LLC?

No, Connecticut does not require an operating agreement for an LLC. However, you should draft one to protect your limited liability status, show proof of ownership, and avoid default state laws.

Do I Have to File My Operating Agreement in Connecticut?

No, you do not have to file your operating agreement in Connecticut. A Connecticut operating agreement is kept internally with other company records.

Does a Single-Member LLC Need an Operating Agreement in Connecticut?

Yes, a single-member LLC needs an operating agreement in Connecticut. This is because an operating agreement allows the owner to detail daily business operations separate from their activities.

About The Author

Author
Atty. Danya Shakfeh, with over ten years of experience as a corporate attorney, leads Motiva Law, offering strategic legal advice to entrepreneurs. She is skilled at transforming complex legal concepts into clear strategies, allowing clients to pursue their goals. A "Rising Star" by Super Lawyers and an alumna of Northwestern University Pritzker School of Law, Danya is distinguished in business law.
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Growth & Transition Advisor
LJ Viveros has 40 years of experience in founding and scaling businesses, including a significant sale to Logitech. He has led Market Solutions LLC since 1999, focusing on strategic transitions for global brands. A graduate of Saint Mary’s College in Communications, LJ is also a distinguished Matsushita Executive alumnus.
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