Forming a Wyoming LLC takes a lot of planning. Between the Certificate of Formation, business licenses, franchise taxes, and more, there’s a lot to consider. And paperwork and startup costs aren’t the only necessary tasks.
You’ll also want to set up your LLC to run smoothly and avoid legal troubles after it’s been registered with the state.
That’s where the LLC operating agreement comes in.
Time-Saving Hack: There are a handful of LLC websites that can form an LLC for you and also offer a customizable operating agreement. ZenBusiness and Northwest are two great examples of this.
What is an LLC Operating Agreement?
An operating agreement gives your business structure and official procedures. It designates ownership, establishes operations, defines member responsibilities, and provides legal protection. Essentially, it lays out everything someone might need to know about your LLC. And it’s an internal document, so there’s no filing or fees involved.
Whether you’re starting a multi-member or single-member LLC, we strongly recommend completing an operating agreement. It’ll benefit and protect you for as long as you’re in business.
Am I Required to Have an Operating Agreement in Wyoming?
No. Not technically, anyway. The Wyoming Secretary of State doesn’t mandate the adoption of an operating agreement, but if you want your LLC to be successful and run smoothly, you should create one.
Operating agreements are vital to the health of an LLC. Not only will an agreement dictate necessary procedures and protect your personal assets in legal disputes, but it also legitimizes your business in the eyes of courts, banks, governmental agencies, and other entities that might read it.
Benefits of Creating an Operating Agreement
You want what’s best for your business. Months or years in the future, you want it to be a profitable and thriving endeavor. Having an operating agreement in place will set up your LLC for sustained success.
It requires some legwork, but it’s well worth it. Just look at some of the benefits:
- Officially designates how the ownership is split up (the percentage each member/manager owns), so there are no disputes.
- Standardizes office and company operations to improve efficiency
- Outlines the procedures for member additions and resignations, registered agent changes, dissolutions, and more, so there is no confusion.
- Avoids Wyoming’s “default rules,” which define baseline procedures for any LLC without an operating agreement and aren’t necessarily the best for your business.
- Grants you greater respect from Wyoming courts.
Free Wyoming LLC Operating Agreement
So you’ve decided to create an operating agreement, and now you’re mentally preparing for this complicated task. The good news is that, with the help of a few quality resources, you don’t have to be a legal expert to draft an effective document.
However, you won’t find these resources on the Secretary of State website, as they don’t provide any official forms or instructions. But there are plenty of them available elsewhere online, including helpful free templates. While most of these templates are good options, we recommend this one, created by Northwest Registered Agent. It’s an ideal jumping off point to get you started.
Whether you’re using a template or starting from scratch, here’s a quick and easy guide for what to include:
Owner or Member Information: Names and mailing addresses.
Company Information: Your LLC’s name, registered office, and principal office.
Registered Agent Information: The name of your registered agent, their address, and contact information.
LLC Formation: The date you filed or will file your Articles of Organization with the Secretary of State.
Business Purpose: The type(s) of business your LLC will be doing in Wyoming.
Term: How long your LLC in Wyoming will be valid, typically until you file for termination.
Capital Contributions: The amount of money each member has invested in the LLC.
Profits, Losses, and Distributions: How income and debts are allocated among members and methods for distributing funds.
Ownership Percentage: How much of the company each member owns.
Management and Roles: The managerial structure and decision-making processes, naming who is in charge or certain operations.
Compensation: How members/managers are compensated and reimbursed.
Bookkeeping: Accounting procedures and member account policies.
Tax Treatment: Whether your LLC will be taxed as a Sole Proprietorship, Partnership, S-Corporation, or C-Corporation.
Member Additions: The procedure for bringing on new members – how they will be admitted, if they’re entitled to income, any expenses they will owe, their roles, etc.
Member Withdrawal: Procedures for the resignation, expulsion, retirement, or death of an existing member.
Amendment Procedures: How your LLC will approve changes to the operating agreement. Usually, it’s through a majority vote by the members.
Dissolution: What happens when you terminate your LLC. How your members will split up the remaining assets or debts.
You don’t always need to include all of the above. If any don’t apply to your LLC, feel free to leave them out. Still, it’s a good idea to cover as many bases as possible.
Even if you’re a single-member LLC, you should consider including as many sections as possible to accommodate future changes. Otherwise, years into the life of your business, you may run into a dispute over something you didn’t include, and you won’t be able to fall back on the operating agreement.
All finished! It’s a good idea to review your document and make sure you didn’t miss anything important. Then, send it out for approval from all of your LLC’s members. They will each need to sign off to make it official. Don’t worry about submitting it to the Secretary of State or Department of Revenue; it’s an internal document, so simply keep it with your other business files.
Making Changes to Your Operating Agreement
For better or worse, your business is going to change. As you begin doing business in Wyoming and, hopefully, raking in profits, the LLC will grow and evolve. It will develop different needs and more complicated processes. Keep everything running smoothly but updating your operating agreement as changes occur.
First, all LLC managers/members must approve the change. To seek approval, follow the guidelines you already outlined in your operating agreement for ratifying amendments.
Because it isn’t recorded with the state, modifying your agreement is as simple as making changes to the Word document or PDF you keep in your own files.
For example: your registered agent resigns and, following Wyoming law, you appoint a registered agent service to take their place. Simply pull up your electronic file, enter the new agent information, save it, and print a copy. Make sure you keep a draft of the previous document as well so you can track the changes you’ve made, just in case the state ever has any questions.
Hiring an Attorney
Worried that you might miss a critical detail? Uncomfortable with legal minutiae? If you want to ensure your operating agreement provides for all possible outcomes and disputes, you might consider hiring an attorney to review it or write it entirely.
Some attorneys have a flat rate for drafting an operating agreement; others bill by the hour. Either way, you’ll only need their assistance for a limited period of time.
Use a site like Avvo to find the right fit for your business. Avvo’s database lets you sort by location, rate, and more – it even shows Wyoming lawyers that specialize in LLCs.
Hiring an LLC Formation Service
The LLC formation process, with its forms and fees, might make you want to throw up your hands and surrender. Don’t do that! Instead, consider hiring an online service like ZenBusiness or Northwest Registered Agent.
An online service like we mentioned earlier can quickly take care of all your necessary filings. Plus, they’ll create a customized operating agreement for you!
Given the amount of time you would spend drafting an agreement from scratch, a formation service is worth it. Not only will you receive a meticulously researched and crafted operating agreement, but you’ll also be able to spend more time growing your business, planning your next move, or just relaxing.
You may not find many state-sponsored resources pertaining to operating agreements, but the Wyoming LLC Act contains specific guidelines and limitations for its powers, explaining what your document can and cannot do.
The operating agreement has extensive influence over your LLC’s activities. According to Wyoming Statutes Section 17-29-110, your operating agreement can govern:
- Relations among members and between members and the LLC
- Manager rights and duties
- The LLC’s activities and conduct
- The means for amending the agreement
- Management and voting rights of members
- Transferability of membership interests
- Distributions to members
- “All other aspects of the management of the limited liability company”
That’s quite a list, and it encompasses a large chunk of your LLC’s operations. However, you can’t include anything you want – section 17-29-110 contains a long list of limitations on an agreement’s power.
As you you draft your document, remember that, most importantly, it cannot authorize actions deemed illegal by state and/or federal law, and it can’t exempt your company from the state’s business maintenance procedures. So, it can’t eliminate the requirements for Annual Reports or valid registered agents.
Creating an operating agreement isn’t easy, but you can make the process smooth and efficient by following this guide and heeding the state’s requirements.