Operating Agreement LLC Nevada

A Limited Liability Company (LLC) Operating Agreement (OA) is a fundamental internal document for any Nevada business entity. Although Nevada law does not require an LLC to adopt a written Operating Agreement, NRS 86.101 defines an Operating Agreement as any written or oral agreement among the Members concerning the affairs of the LLC and the conduct of its business. Even though the state does not mandate a written OA, preparing one is strongly recommended because it governs internal operations and establishes Member rights and obligations.

Why an Operating Agreement Is Crucial

The OA serves as the LLC’s governing document. It outlines ownership percentages, operating procedures, profit allocation, and management responsibilities. Single Member LLCs also benefit from a written OA because it helps demonstrate that the business is operated as a separate legal entity. This becomes important in litigation, where the OA helps support liability protection.

An OA is an internal document and is not filed with the Nevada Secretary of State or any other agency. Once signed, the OA becomes legally binding on all Members. Third parties may request a copy for verification purposes, for example when a financial institution opens a business bank account or when a title company processes a real estate purchase. Courts and agencies may also request the OA during audits or legal proceedings.

Key Information Included in a Nevada Operating Agreement

Nevada’s LLC statutes place Operating Agreement provisions throughout the governance sections of Chapter 86. Some references also appear in NRS 86.286 within the general operation heading, while NRS 86.101 provides the formal definition. These provisions treat the OA as an internal governance document rather than a filing requirement.

Basic and Formation Details

• LLC name, effective date, registered agent information, business purpose, and duration • Statement that the LLC may conduct any lawful business permitted under Nevada law • Effective date of the OA upon adoption by the Members

Ownership and Contributions

• List of all Members • Each Member’s Membership Interest expressed as a percentage • Initial Capital Contributions for each Member • Rules for additional contributions, which require unanimous written consent • Capital Accounts that do not accrue interest

Tax Considerations

• Federal tax classification, for example sole proprietorship, partnership, S corporation, or C corporation • Qualified Joint Venture election available to spouses because Nevada is a community property state • Capital Account maintenance rules that follow the Internal Revenue Code and Treasury Regulations • Unanimous consent requirement for an S corporation election

LLC Management Structures

• Member managed structure, where Members oversee operations and can bind the LLC • Manager managed structure, where designated Managers operate the business and Members take a passive role

Withdrawal, Transfers, and Dissolution

• Rules for Member withdrawal or transfer of Membership Interests • Transfer allowed without consent, but admission of a new Member requires unanimous written consent • Under NRS 86.351, transferees receive only economic rights and do not gain management or voting authority unless admitted as Members • Dissolution events, such as unanimous Member consent, judicial dissolution, or absence of Members • Requirement to pay debts before distributing assets after dissolution