Multi-Member LLC Operating Agreement: How to Fill It Out

A multi-member LLC operating agreement is the internal document that spells out how two or more owners split profits, contribute capital, vote on decisions, and handle a member leaving. Most states don't require you to file it, which is exactly why it gets skipped, but without one your state's default rules kick in automatically, and those defaults rarely match what co-founders actually agreed to verbally. Here's how to fill one out for a real two-member LLC, section by section, using a worked example with a 60/40 ownership split.

What a Multi-Member Operating Agreement Covers

An operating agreement is a private contract between the LLC's owners (called members). It isn't filed with the state, unlike your Articles of Organization, but it becomes the reference document your bank, your accountant, and potentially a court will ask for if members disagree. A complete agreement covers company and member information, capital contributions, ownership percentages, how profits and losses are allocated, management structure and voting thresholds, distribution timing, what happens if a member wants to sell or leaves, and how the LLC dissolves if the members decide to close it.

The stakes are higher with multiple members than with a single owner. Without a written agreement, most states default to splitting profits and voting power equally among members, regardless of who contributed more cash, more equipment, or more sweat equity. If one founder put in $80,000 and the other put in $20,000, a 50/50 default split rarely reflects the deal they actually meant to make.

Information to Gather Before You Start

Before you open the form, get everyone on the same page about these numbers. Filling them in is easy; agreeing on them is the part that takes a real conversation.

• Legal LLC name and the state where it's registered
• Full legal names and addresses of every member
• Each member's capital contribution (cash amount, or a fair-market value for property, equipment, or services contributed)
• Ownership percentage for each member, and whether it matches the contribution ratio or not
• Whether the LLC will be member-managed (all owners vote on decisions) or manager-managed (one or more designated managers run daily operations)
• How profits and losses will be allocated, and how often distributions happen
• The LLC's EIN, since a multi-member LLC needs one from the IRS even if it has no employees

Step by Step: Filling Out the Agreement

Open the multi-member LLC operating agreement template in your browser and work through it in this order.

1. Company and Member Details

Enter the LLC's legal name exactly as registered with the state, the formation date, the registered agent, and the principal business address. Then list every member by full legal name and address. For a two-member example, say Maya and Diego are forming a marketing agency LLC: both names go in this section along with their mailing addresses.

2. Capital Contributions

Record what each member is putting into the company and when. If Maya contributes $60,000 in cash and Diego contributes $40,000 in cash plus equipment valued at $10,000, list each contribution type and dollar amount separately. The agreement should also state whether members are required to make additional contributions later if the LLC needs more capital, and what happens if a member can't or won't.

3. Ownership Percentages and Profit and Loss Allocation

This is the section most first-time filers get wrong. Ownership percentage doesn't have to equal capital contribution ratio, but if it doesn't, say so explicitly. In Maya and Diego's case, contributions total $110,000: Maya put in about 55%, Diego about 45%. If they instead agree on a flat 60/40 ownership split because Maya is also handling daily operations, the agreement needs to state that ownership is 60% Maya and 40% Diego, separately from the contribution figures, so there's no ambiguity later. Then specify how profits and losses will be allocated, whether it tracks ownership percentage exactly or uses a different formula, since the IRS requires any special allocation to have a legitimate economic basis under Section 704(b) rather than being chosen purely to shift tax liability.

4. Management Structure and Voting

Choose member-managed or manager-managed and fill in the corresponding section. Most small LLCs with two or three active owners choose member-managed, meaning every member has a direct say in decisions. If Maya and Diego bring on a third investor who isn't involved day to day, manager-managed structure lets them name themselves as managers while the investor remains a member without operational authority. Either way, specify what percentage vote is needed for routine decisions versus major decisions like taking on debt, admitting a new member, or selling company assets. A common structure is majority vote for day-to-day decisions and unanimous consent for anything that changes ownership or debt obligations.

5. Distributions, Transfers, and Dissolution

Set the distribution schedule (monthly, quarterly, or at the members' discretion) and confirm it follows the same allocation percentages from step 3. Add a transfer clause describing what happens if a member wants to sell their interest, typically a right of first refusal for the remaining members before an outside buyer can be considered, plus a valuation method so nobody has to guess what the interest is worth mid-negotiation. Finally, include a dissolution section describing the order in which the LLC pays off debts, returns remaining capital contributions, and splits any leftover assets among members if the group votes to close the company.

6. Tax Treatment

By default, the IRS treats a multi-member LLC as a partnership, meaning the LLC itself doesn't pay income tax. Instead it files an informational Form 1065 and issues each member a Schedule K-1 showing their share of the profit or loss, which they report on their personal return. State in the agreement whether the LLC will use this default partnership treatment or elect to be taxed as an S corporation or C corporation, since that election affects how members take money out and what payroll tax applies to any member who also works in the business.

Getting Every Member's Signature

Every member needs to sign and date the completed agreement, and each member should keep a copy. If your state or your bank requires notarization to open a business account, add a notary block before printing. Once the document is finalized, you can add each member's signature directly on the PDF without printing, scanning, and re-uploading, which matters when co-founders are in different cities and need to sign on their own schedule rather than in the same room.

If you're filling in blanks across several fields rather than adding a signature to a finished document, PDF Editify's fill PDF tool lets you type directly into the form fields in your browser, save your progress, and download the completed agreement when every section is filled in. Files are processed in your browser session and deleted afterward, so a document with two people's financial details isn't sitting on a server longer than it needs to. A one-time One Week Plan costs $3 and covers the entire process from filling out the agreement to collecting signatures, with nothing to cancel afterward, which is a cheaper way to handle a single formation document than committing to a monthly subscription you'll only use once.

Single-Member vs Multi-Member Agreements

A single-member operating agreement is mostly about liability protection: it proves to a court or the IRS that your LLC is a separate entity from you personally, even though you're the only owner. There's no need to negotiate profit splits or voting thresholds because there's only one vote. If you're the sole owner, our single-member LLC operating agreement guide covers that simpler version step by step.

A multi-member agreement does everything a single-member agreement does, plus it has to resolve real disagreements before they happen: who gets what percentage, who decides what, and what happens when someone wants out. That's why it's longer and why skipping it is riskier. The single-member default (state law assumes you own 100%) rarely causes disputes. The multi-member default (usually an equal split) very often doesn't match what the founders actually agreed to, and by the time that mismatch surfaces, it's usually because two people disagree about money.