Your operating agreement is the blueprint for your Kentucky LLC. This legally binding document establishes the rules and processes for your LLC. This determines how your LLC will proceed in major situations like voting, allocating profits and losses, transferring membership interest, and even dissolving the business. You can use one of our attorney-drafted templates to fill out, save, and download your operating agreement for free.
Unlike your LLC’s articles of organization, an operating agreement is an internal document, so it isn’t filed with the Kentucky Department of Business Filings. That said, your operating agreement is a crucial document for your LLC, so it’s important to take the time to make sure it’s a good one. That’s why Northwest offers free, attorney-drafted operating agreement templates to get you started.
Your operating agreement lays out the big-picture plan for your Kentucky LLC. While you’re free to cover any topics not prohibited by Kentucky law, there are a few things your operating agreement should definitely include, such as:
Want to focus on your business and leave the legal matter to us? Our lawyers have drafted a comprehensive operating agreement you can use for free. You can even fill it out on this page, save it in a free account for later, and download a completed draft to sign.
In order to fill out our free operating agreement template, you’ll need your:
This must be your business’ legal entity name, or the name you put on your LLC Articles of Organization.
Did an LLC member contribute $500? $5k? A storefront? Put that here.
You’ll just write in 16 here since our version has a set amount of pages.
Remember, this is an internal document, so you won’t have to submit these names to the state just because they’re on here. However, you might need to add these people to your BOI Report.
Include any initial contributions, even if it’s only a small percentage.
While we recommend having a business bank account, some banks like to actually see the operating agreement before you open the account. If that’s the case, you can leave this blank for now.
This is the place your business operates from.
You can add this in later if you aren’t sure when your meeting will be held.
There are a few spots in our template where you’ll need a signature from one or more members.
A Kentucky LLC should have an operating agreement because a company cannot act for itself. In order to operate, LLCs require real humans (and other entities) to carry out company operations.
Per KY Rev State § 275.003, Kentucky LLCs are not required to have an operating agreement. However, drafting a comprehensive operating agreement is important for many aspects of your business. For example:
In Kentucky, LLC members aren’t required to list their names on the Articles of Organization. This helps LLC owners live more privately, but it can make it more difficult to prove that you actually own your business. Since your operating agreement lists your members’ names and addresses, you can show it to a bank, landlord, or potential investor to prove ownership of your LLC.
In order to enjoy the benefits of limited liability protection, an LLC must be able to prove that it is legally separate from its owners. This requires LLCs to take certain steps, like keeping business and personal finances separate. A written operating agreement can also help you demonstrate that your LLC is a distinct legal entity with clear rules and protocols. If your LLC is ever sued, your operating agreement will be an essential weapon.
Occasional conflict is a normal part of owning a business with other people, but you want to be able to resolve conflicts quickly and fairly. Since all of your members have agreed to your operating agreement, you can use it as a guidebook for getting back to your shared vision.
If you do not adopt an operating agreement, your LLC will automatically be subject to Kentucky’s default LLC statutes. This statutes might not work well for your LLC. That’s why it helps to have an operating agreement that is customized for your LLC.
We asked our lawyers for an example of how an operating agreement can make or break your LLC. Here’s what they said.*
“Consider the case of Racing Investment Fund 200 LLC, where the LLC incurred a large debt and intended to dissolve entirely. Misconstruing the operating agreement and ignoring the central tenet of limited liability for the members of a LLC, the lower courts attempted to force the LLC members to contribute additional capital to the LLC in order to pay and discharge the LLC’s debt. Looking to the statutes, and interpreting the operating agreement through the lens of limited liability, the Kentucky Supreme Court eventually reversed the lower courts’ rulings and found that the LLC members were not required to pay additional capital into the LLC in order to pay and discharge the LLC debts.
“In its opinion the Supreme Court stressed the central tenet of the LLC was limited liability, and while there are some instances where members or managers of LLCs may retain their personal liability, such retention was the exception, not the rule. As such, in order for personal liability to extend to the members or managers of LLCs, such members or managers must explicitly declare or express their intention in writing to legally retain personal liability for the debts and liabilities of a LLC. For these reasons (and more), a reasonably prudent business owner would (and should) adopt and maintain an operating agreement.”
Northwest provides free, attorney-drafted and Kentucky-specific operating agreement templates. Choose the one below that best suits your business.