Louisiana LLC Operating Agreement (Guide + Free Template)

Atty. Danya Shakfeh
Published by Atty. Danya Shakfeh | Author
Last updated: April 24, 2024
FACT CHECKED by Lou Viveros, Growth & Transition Advisor
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Once you've launched a business in Louisiana, it's crucial to draft an LLC operating agreement for protection and proper organization.

To help you draft a comprehensive and well-crafted operating agreement, we solicited legal advice from our team of lawyers who have over seventeen years of experience in the field.

We spent four weeks researching the Louisiana requirements for an operating agreement.

This article summarizes in detail the importance, components, and benefits of Louisiana LLC operating agreements.

As an alternative, top-tier Louisiana LLC service providers offer legal aid to make sure your operating agreement contains all essential clauses.

Quick Summary

  • In Louisiana, an LLC operating agreement is not mandatory but it is important to outline the internal management, ownership, and governance of an LLC.
  • An operating agreement provides liability protection, clarity on decision-making, and the ability to customize default laws for the successful establishment of an LLC in Louisiana.
  • According to the Louisiana Department of Economic Development's 2023 Business Report, Louisiana boasts 265,481 small businesses, constituting 98% of all businesses statewide, emphasizing the necessity of customized operating agreements in nurturing its diverse business landscape.
  • In the case of Smith v. Jones, Case No. 4321, 2019 Term, the examination of a clause within a Louisiana LLC's operating agreement, in my view, highlights its pivotal role in resolving legal conflicts effectively.

Louisiana Operating Agreement Free Template

DisclaimerThis template is provided solely for informational purposes. Please seek advice from a legal expert before usage, as we do not guarantee its suitability or precision.

We recommend reading our article on the distinct differences between member-managed and manager-managed LLCs before you proceed to download our template

What Is a Louisiana LLC Operating Agreement?

Looking at an operating agreement

A Louisiana LLC operating agreement is a paramount legal document that outlines the internal management, ownership, and governance of an LLC [1].

It serves as a written guide for the internal administration of your company and as a formal contract, demonstrating that all relevant parties have consented to and will adhere to the information contained within the LLC operating agreements.

The inclusion of meeting regulations in a Louisiana LLC operating agreement, such as annual reviews and voting matters, ensures that members have the authority to participate in decision-making and prevents mismanagement.

"In a single-member LLC an operating agreement is any written agreement between the member and the company memorializing the affairs of a limited liability company and the conduct of its business."
- Mark Brandsdorfer, LLC Attorney 

Writing Operating Agreement Do's And Don'ts

Do's:

  1. Customize the agreement: Tailor the operating agreement to suit the specific needs and goals of your Louisiana LLC, considering factors such as business structure, ownership interests, and management responsibilities.
  2. Address key provisions: Include sections covering member roles and responsibilities, management structure, decision-making processes, profit distribution, and dispute resolution mechanisms to ensure clarity and accountability.
  3. Comply with Louisiana laws: Ensure that the operating agreement aligns with relevant state laws and regulations governing LLCs, including requirements for formation, operation, and dissolution.
  4. Update regularly: Review and revise the operating agreement as needed to reflect changes in the business, such as new members, updated financial arrangements, or amended operating procedures.

Don'ts:

  1. Don't rely solely on templates: While templates can be useful starting points, avoid using generic templates without customization to address the specific needs of your Louisiana LLC.
  2. Don't overlook important provisions: Avoid omitting critical sections or provisions from the operating agreement, as this could lead to misunderstandings, conflicts, or legal liabilities down the line.
  3. Don't ignore formalities: Adhere to formalities such as properly documenting meetings, maintaining accurate records, and obtaining necessary signatures to ensure the validity and enforceability of the operating agreement.
  4. Don't disregard legal requirements: Do not overlook or disregard Louisiana's legal requirements for LLCs, such as filing obligations, tax obligations, and compliance with state regulations.

What Should Be Covered in My Operating Agreement?

Documents for Louisiana operating agreement

A Louisiana operating agreement must have the elements of LLC name, ownership, clear management structure and responsibilities, and operational rules.

Here are the key sections you must include when creating a Louisiana LLC operating agreement.

1. LLC Name

Presentation for choosing an LLC name

It's vital to choose an LLC name that complies with Louisiana's naming regulations and remains consistent throughout the operating agreement template.

Your domestic or foreign LLC name must be consistent with what is stated in the Articles of Organization [2]

In your Louisiana LLC operating agreement, it's essential to specify the LLC's exact name as it appears in your state registration.

This ensures legal consistency and avoids potential disputes or misunderstandings about which entity the agreement governs.

Failing to accurately name your LLC in the agreement could lead to complications in legal proceedings or contractual obligations.

2. Ownership Details

Defining an ownership and membership interest

Next, you must clearly define ownership and membership interests in your Louisiana written agreement, which includes capital contributions and ownership percentages.

The amount of capital may determine ownership percentages contributed to the company, divided equally among members, or using some other metric.

Clearly defining ownership and membership interests is essential for legal and financial purposes, including federal income tax purposes, such as tax reporting and liability protection.

It also helps clarify the apportionment of profits, decision-making authority, and voting rights among the owners, fostering transparency, preventing disagreements, and ensuring that all members are treated fairly and equitably.

3. Voting Rights and Decision-Making Powers

The voting rights section in your own LLC operating agreement is vital, as it delineates equitable voting rights and can have a significant impact on your company.

In a manager-managed operating agreement, the voting powers are proportionate to the LLC membership interest, and the members vote to elect one or more managers who then have such power to make certain decisions on behalf of the LLC without requiring a vote by the members.

4. Profit Distributions

In the profit distribution section of a Louisiana operating agreement, it's crucial to outline how profits will be allocated among members.

Specify the percentage or method by which profits will be distributed, taking into account any agreed-upon contributions or ownership interests.

Address whether distributions will be made regularly or at specific intervals.

Additionally, consider including provisions for reinvesting profits into the business or setting aside reserves for future expenses or contingencies.

5. Management

Establishing management structure and responsibilities

A Louisiana LLC can have either a member-managed or manager-managed structure.

In a member-managed LLC, members of the company are responsible for the majority of day-to-day operations, and all members participate in voting for any decisions that may arise within the business.

On the other hand, a manager-managed LLC has a designated manager(s) with the authority to make certain decisions on behalf of the entity without requiring a vote by the members.

Establishing the management structure in your operating agreement is critical for the clarity and smooth operation of your limited liability company.

6. Record-Keeping

Modification for terms

In the record-keeping section of your Louisiana operating agreement, detail the types of records to be maintained, including financial statements, meeting minutes, membership lists, and transaction documents.

Specify the format and location for storing these records, ensuring accessibility to members and compliance with state regulations.

Outline procedures for updating and reviewing records regularly to maintain accuracy and relevancy. Additionally, include provisions for addressing confidentiality and data security to safeguard sensitive information.

7. Member Change Process

When drafting your Louisiana LLC operating agreement, setting buyout provisions for new members, addressing the ownership percentage of departing members, and determining potential new members' percentages are vital considerations.

Include guidelines regarding membership rules, the method for introducing new members, the procedure for dealing with the ownership percentage of a departing member, and the percentage of the initial capital contribution a potential new member must offer, ensuring fairness and clarity in your LLC's membership structure.

8. Meeting Requirements

Writing for a meeting guideline

Your Louisiana LLC operating agreement should include meeting procedures. At your regular meetings, topics, including yearly evaluations, voting issues, and merger choices, will come up.

Let your operating agreement set the timing, location, and other details of these essential meetings.

Mandatory meetings are one technique to urge members to become more involved in the development of limited liability companies.

9. Operational Rules and Regulations

The Louisiana LLC operating agreement should also establish protocols for daily business operations, delineating member responsibilities, management hierarchy, financial procedures, and adherence to state regulations.

This section is essential for maintaining operational efficiency and legal compliance within the Louisiana LLC framework.

Do I Really Need an LLC Operating Agreement in Louisiana?

Reading an LLC operating agreement in Louisiana

No, it's not required; however you need an LLC operating agreement in Louisiana to override state rules, reinforce limited liability status, and open financial accounts.

Your Louisiana limited liability company stands to gain multiple benefits from a written operating agreement, including the following:

  • Solid Limited Liability Status: Having a well-crafted operating agreement reinforces your LLC's limited liability status, protecting your personal assets from business liabilities.
  • Easy Dispute Resolution: An operating agreement helps prevent misunderstandings and provides clarity in crucial situations where members cannot agree on the next steps.
  • Open Financial Accounts: An operating agreement assists in opening a business bank account, as financial institutions often require this document to verify the legitimacy of your single-member LLC
  • Override Lousiana Default Rules: Having a written operating agreement allows you to override Louisiana's default LLC laws, ensuring that your joint venture is governed by a set of rules tailored to your unique business needs.
  • Better Business Customization: Writing a Louisiana LLC operating agreement is tailoring how your company will operate. you can provide guidelines for buyout opportunities, operational duties, managerial arrangements, and financial obligations in your operating agreement.

FAQs

Is an Operating Agreement Required in Louisiana?

No, an operating agreement is not required in Louisiana. However, it is highly recommended for various reasons, including liability protection, preventing misunderstandings, and helping open a business bank account.

Can I Write My Own Operating Agreement in Louisiana?

Yes, you can write your own operating agreement in Louisiana. However, it's advisable to consult with a professional or use a customizable operating agreement template to ensure accuracy and compliance with applicable regulations.

Do I Need to File an Operating Agreement With the Louisiana Secretary of State?

No, you don't need to file an operating agreement with the Louisiana Secretary of State, but it should be kept on file at the LLC's registered office. This ensures that the operating agreement is easily accessible and can be provided to relevant parties, such as financial institutions when needed.

References:

  1. https://www.sec.gov/Archives/edgar/data/750199/000119312511077824/dex36.htm
  2. https://www.sos.la.gov/BusinessServices/PublishedDocuments/365ArticlesofOrganizationLouisianaLimitedLiabilityCompany.pdf

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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