Operating Agreement for Llc in Idaho

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If you`re looking to start a business in Idaho, forming a limited liability company (LLC) is a popular choice due to its flexibility and protection of personal assets. An LLC is a type of business structure that separates the owner`s personal assets from the company`s liabilities. However, to ensure your LLC is properly structured and protected, you must draft an operating agreement.

What is an Operating Agreement?

An operating agreement is a legal document that outlines how an LLC will operate and how decisions will be made. It is not required by law in Idaho, but having one can provide additional protection. The operating agreement will include details such as the LLC`s management, the distribution of profits and losses, and the rules for adding or removing members.

Why Should You Have an Operating Agreement?

Having an operating agreement can provide several benefits, including:

1. Personal Asset Protection: An operating agreement helps protect personal assets by separating them from the company`s liabilities. Without an operating agreement, you risk losing personal assets if the LLC is sued.

2. Clear Understanding among Members: An operating agreement outlines the roles and responsibilities of each member, which can prevent misunderstandings and disputes that could harm the business.

3. Helps when Dealing with Banks and Lenders: Many banks and lenders require an operating agreement when opening business accounts or providing loans.

4. Evidence of Legitimacy: An operating agreement is evidence that your LLC is a legitimate business, which can help when dealing with customers, vendors, and suppliers.

What Should be Included in an Operating Agreement?

While an operating agreement can be customized to fit the specific needs of your LLC, here are some common items that should be included:

1. Formation and Purpose: This section should discuss how the LLC was formed and its purpose.

2. Management: This section should outline how the LLC will be managed. This can be either member-managed or manager-managed.

3. Membership: This section should identify all members of the LLC, their ownership percentages, and the process for admitting new members.

4. Capital Contributions: This section should outline the initial capital contributions made by each member and the process for making additional contributions in the future.

5. Profit and Loss Distribution: This section should outline how profits and losses will be distributed, including any special allocations.

6. Voting Rights: This section should identify the voting rights of each member and how decisions will be made.

7. Transfer of Ownership: This section should outline how ownership can be transferred and the process for doing so.

8. Dissolution: This section should outline the process for dissolving the LLC, including the distribution of assets.


While an operating agreement is not required by law in Idaho, it is an essential document that provides personal asset protection, defines the roles and responsibilities of each member, and helps prevent disputes. It can also provide evidence of legitimacy when dealing with banks, lenders, customers, suppliers, and vendors. When drafting an operating agreement, it`s important to include all necessary sections and customize it to fit the specific needs of your LLC.