Operating Agreement LLC Georgia

A Georgia Limited Liability Company (LLC) Operating Agreement is an internal document that outlines how the LLC will be governed. It establishes ownership percentages, defines management responsibilities, and provides the rules members will follow when operating the business. Some refer to it as a Georgia Operating Agreement or Georgia LLC Company Agreement. Regardless of the title used, it serves as the primary internal governance document for the LLC.

While many Georgia LLCs adopt an Operating Agreement during formation, others create one later as the business structure becomes more defined. The document is not filed with the state and remains part of the company’s internal records.

Is a Georgia Operating Agreement Required?

Georgia does not require LLCs to maintain an Operating Agreement. Under the Georgia Limited Liability Company Act, an Operating Agreement may be written, oral, or implied. Although optional, a written agreement is strongly recommended. Without one, the LLC defaults to Georgia statutory provisions, which may not reflect the members intended operations.

Why a Georgia Operating Agreement Matters

Supports limited liability protection

A written Operating Agreement helps demonstrate that the LLC operates independently of its members. Courts may evaluate internal company practices when determining whether to uphold limited liability protections, particularly for single member LLCs.

Provides structure for internal operations

Georgia’s default statutory rules apply only when an Operating Agreement does not address a specific issue. A written agreement allows members to define their own management structure, voting standards, and financial practices.

Required by banks and third parties

Financial institutions often request an Operating Agreement when opening business accounts or processing loans. It clarifies ownership information and identifies who has authority to act on behalf of the LLC.

Helps maintain compliance with Georgia’s annual registration requirement

Georgia LLCs must file an annual registration each year to remain in good standing. The Operating Agreement can assign responsibility for completing this filing.

Key Provisions to Include in a Georgia Operating Agreement

Basic Company Details

• LLC name
• Business purpose
• Principal office address
• Duration of the LLC
• Federal tax classification

Georgia requires LLC names to include Limited Liability Company, LLC, or a permitted abbreviation.

Registered Agent and Office

• Name and Georgia street address of the registered agent
• Procedures for changing the registered agent
• Filing updates with the Georgia Secretary of State

Member Information

• Names and addresses of members
• Ownership percentages
• Initial capital contributions

Capital Contributions

• Description of each member’s contribution
• Rules for future contributions
• Statement that contributions do not accrue interest unless stated

Management Structure

• Whether the LLC is member managed or manager managed
• Duties and authority of managers or members
• Procedures for appointing or removing managers

Profit and Loss Allocation

• Allocation method for profits and losses
• Conditions for distributing profits
• Confirmation that distributions may only be made when the LLC can meet its obligations

Tax Election

• Federal tax classification selected by the LLC
• Notice that certain tax elections require IRS filings

Voting Procedures

• Voting rights of members
• Quorum requirements
• Vote thresholds needed for various company decisions

Georgia LLCs often base voting power on ownership percentages unless the Operating Agreement states otherwise.

Transfers of Interest

• Rules for transferring membership interests
• Procedures for admitting new members
• Treatment of interests upon withdrawal, death, or removal of a member

Records and Bookkeeping

• Method for maintaining financial records and operational documents
• Responsibility for filing Georgia’s annual registration
• Statement that failure to file can lead to administrative dissolution

Compensation

• Policies for member or manager compensation
• Reimbursement rules for business expenses

Dissolution

• Events that may trigger dissolution
• Steps for winding up business operations
• Filing of a Certificate of Termination with the Georgia Secretary of State

Amendments

• Procedure for modifying the Operating Agreement
• Requirement for written approval unless otherwise specified

Management Options for Georgia LLCs

Member Managed

Members handle the daily activities of the LLC and have authority to act on behalf of the company. This structure suits small businesses or closely held LLCs. Voting authority typically follows ownership percentages unless the Operating Agreement specifies differently.

Manager Managed

Members appoint one or more managers to oversee daily operations. Managers may be members or individuals outside the LLC. Members retain decision making authority on major issues while managers handle routine operations.

Creating and Maintaining the Georgia Operating Agreement

Drafting and Signing

The Operating Agreement becomes effective once adopted by the members. Although Georgia recognizes written, oral, and implied agreements, a written document ensures clarity and reduces the risk of disputes.

Recordkeeping

The agreement should be kept with the LLC’s permanent business records. Georgia requires annual registration updates, making proper recordkeeping essential for compliance.

Amending the Agreement

Members may update the Operating Agreement following the amendment procedures outlined in the document. If a change affects information filed with the Georgia Secretary of State, the LLC must submit updated forms.