Oklahoma law does not require you to have an operating agreement in order to create a Limited Liability. After the articles of organization have been executed and filed with the Oklahoma Secretary of State, the proposed organization becomes a Limited Liability Company (LLC) under the Oklahoma Limited Liability Company Act. However, for any viable business and for all the practical reasons such a document is not only helpful but realistically speaking, almost necessary. Therefore, it’s not a wise decision to start and operate an organization as an LLC without an operating agreement. My name is Vivid Niroula, and I am a business lawyer based in Oklahoma City. My passion is helping entrepreneurs and seasoned business persons like you decide whether an LLC is a good fit, prepare and file articles of organizations, draft and execute operating agreements, recommend proper corporation type for tax purposes, and help you guide through the entire process saving time, money and grief in the future.

This article focuses on the LLC operating agreement, if you are interested in creating an Oklahoma LLC, please read my other article on the topic: How to create an LLC in Oklahoma? Step-by-step instructions.

What is an operating agreement for an Oklahoma LLC?

An operating agreement is an important internal document, that outlines the ownership interests of the members, specifies the rules and regulations of the business, lays out the management structure, solidifies a plethora of rights and responsibilities including member voting rights, and spells out the profit/loss distributions. An operating agreement is just that, a legal and binding agreement between the members (owners), that is not required to be filed with the Secretary of State or any other governmental agencies, and kept at the business location.

What’s included in an operating agreement for an Oklahoma LLC?

Creating an LLC by filing articles of organization with the Secretary of State is a simple process, pretty straightforward, and requires very little information about the daily operations of the business. The fact is that a lot of steps go into running a business on a day-to-day basis, from raising capital, making tough decisions, and managing employees, to paying its members, just to name a few. Since the articles of organization don’t include any details pertinent to running a business, an operating agreement helps you fill in the gap. Although every operating agreement is unique to the specific business they are in, the majority of them will include the following areas:

  1. Capital contributions and ownership interest for each member,
  2. Allocation and distribution of profit to each member,
  3. Management structure, whether member-managed or manager-managed,
  4. Various rights and obligations of the members and managers,
  5. Accounting and bookkeeping,
  6. Transfer of ownership interest,
  7. Disqualification of an existing member, the addition of a new member,
  8. Means and conditions for amending the operating agreement,
  9. Dissolution of the company.

What is the purpose of an operating agreement for an Oklahoma LLC?

The purpose of an operating agreement is to set a system of rules in place, that determines how the financial, personnel, operational, and organizational functions of the company are carried out during and at the end of the LLC’s existence. By having an operating agreement in place, the LLC establishes a solid system for making decisions, raising capital, and transferring units between members and other rules pertaining to management and ownership. Another purpose of an LLC operating agreement is to tailor the management and operation structure to the need of the company so that its resources are utilized most efficiently, thereby optimally helping the company reach its goals.

Does Oklahoma LLC require an operating agreement?

No, an Oklahoma LLC does not require an operating agreement, under Oklahoma law, an LLC is created upon the filing of the articles of organization with the office of the Secretary of State. So, technically an operating agreement is not a required document to create an LLC, however, if you do have an operating agreement it’s important to know that an LLC is bound by its operating agreement regardless of whether it executes the operating agreement. Although its’ not required to have an operating agreement, it’s wise to establish solid rules that help govern the  LLC’s operation and decision-making process.

Does a single-member LLC need an operating agreement in Oklahoma?

While Oklahoma law does not require an LLC to have an operating agreement, it’s highly recommended to create one, even though it’s a single-member LLC. There are both practical and financial reasons why you should have an operating agreement in place even though your company is a single-member LLC. Many financial institutions like banks require an LLC to have an operating agreement before they will let you open a business bank account. Additionally, the operating agreement will solidify the separation between the LLC and you as a person, further shielding you from personal liability over the debts of the company. Remember, one of the perks of creating an LLC is to limit your personal liabilities for the debt obligations of the company, a lack of a written operating agreement may blur the separation between the company and you as an individual making you vulnerable to lawsuits for LLC’s obligations.

Hire a Business Attorney to create your LLC operating agreement in Oklahoma City

You do not need a lawyer to create an operating agreement for an LLC, however, an operating agreement is an important legal document and an inadequate document may cost you time, money, and lots of grief in the future. Vivid Niroula is a business lawyer with experience in drafting operating agreements tailored to your needs, hire Niroula Law today to draft your operating agreement for peace of mind. You can reach us by calling (405) 456-9250, emailing vivid@niroulalaw.com, or by filling out the Contact Us Form on this website.