Operating Agreement LLC Michigan

A Michigan LLC Operating Agreement is a legal document that explains the internal structure and operations of a Limited Liability Company. It is a written contract among the Members that defines ownership, management, and procedural rules.

Is a Michigan Operating Agreement Required

Michigan does not require an LLC to have an Operating Agreement. State law still recognizes agreements among Members, including those for single member LLCs. If no written agreement exists, the LLC must follow Michigan’s default rules. These rules may divide profits equally even when Members contributed different amounts.

Filing Requirements

The Operating Agreement is an internal document. It is not filed with the Michigan Secretary of State or the Michigan Department of Licensing and Regulatory Affairs. No filing fee applies. Courts or state agencies may ask for the agreement during audits or legal matters.

Why an Operating Agreement Is Essential

A written agreement offers several practical benefits.

• Strengthens legal protection by showing the LLC operates separately from its Members
• Reduces internal disputes by documenting decision making, profit allocation, and ownership structure
• Serves as proof of ownership for banks and lenders
• Allows the company to override default statutes found in MI §450.4101 through §450.5200

Key Components of a Michigan Operating Agreement

• General Information: LLC name, purpose, duration, effective date, and Registered Agent. • Ownership and Capital Contributions: Members’ names, contributions, and ownership percentages. • Management Structure: Whether the LLC is member-managed or manager-managed, and the responsibilities of each role. • Voting Rights: How votes are allocated, and which actions require a vote. • Profits, Losses, and Distributions: How profits and losses are divided, and how distributions occur. • Transfer of Interests and Dissolution: Rules for buyouts, triggering events, and dissolution procedures. • Bookkeeping and Taxes: Accounting method, financial recordkeeping, and tax classification.

Executing and Amending the Agreement

The agreement becomes enforceable once all members sign. Notarization is unnecessary. Amendments usually require a meeting and member approval, as described in the agreement.