Operating Agreement LLC New York

A New York Limited Liability Company (LLC) Operating Agreement is an internal document that explains how the business will be governed. It defines ownership interests, establishes management authority, and outlines the procedures members will follow when making company decisions. Some refer to it as a New York Operating Agreement or New York LLC Company Agreement. Regardless of the name used, it serves as the LLC’s primary internal governance document.

Many New York LLCs prepare an Operating Agreement shortly after formation, as required by state law. The agreement is not filed with the state and remains part of the LLC’s internal records.

Is a New York Operating Agreement Required?

New York requires LLCs to adopt an Operating Agreement. Under New York Limited Liability Company Law Section 417, every LLC must adopt a written Operating Agreement within 90 days of filing its Articles of Organization. The agreement must be in writing. Oral or implied Operating Agreements are not sufficient under New York law.

Why a New York Operating Agreement Matters

Required by statute

Unlike most states, New York mandates a written Operating Agreement. Failure to adopt one does not invalidate the LLC, but it places the company out of statutory compliance.

Establishes internal governance rules

New York’s default statutory provisions apply only when the Operating Agreement does not address an issue. A written agreement allows members to define management authority, voting rights, financial allocations, and dispute resolution procedures.

Helps preserve limited liability protection

A written Operating Agreement helps demonstrate that the LLC operates as a separate legal entity. Courts may consider internal governance documents when evaluating liability protections.

Required by banks and third parties

Banks, lenders, and professional advisers commonly require an Operating Agreement to verify ownership and confirm who has authority to act on behalf of the LLC.

Key Provisions to Include in a New York Operating Agreement

Basic Company Details

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

New York LLC names must include Limited Liability Company, LLC, or an accepted abbreviation.

Registered Agent and Office

• Designation of the New York Secretary of State as agent for service of process
• Address for forwarding legal notices
• Optional appointment of an additional registered agent

Member Information

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

Capital Contributions

• Description of contributions made by each member
• Rules governing additional contributions
• Statement that contributions do not earn interest unless agreed

Management Structure

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

Profit and Loss Allocation

• Allocation of profits and losses
• Timing and conditions for distributions
• Confirmation that distributions may only be made if the LLC can meet its obligations

Tax Election

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

Voting Procedures

• Voting rights of members
• Quorum requirements
• Vote thresholds for approving actions

New York LLCs commonly base voting on ownership percentages unless modified by the agreement.

Transfers of Interest

• Rules for voluntary and involuntary transfers
• Procedures for admitting new members
• Treatment of interests upon withdrawal, death, or expulsion

Records and Bookkeeping

• Procedures for maintaining company and financial records
• Assignment of responsibility for compliance filings
• Retention of the Operating Agreement at the principal office

Compensation

• Rules for compensating members, managers, or officers
• Reimbursement policies for business expenses

Dissolution

• Events that may trigger dissolution
• Steps for winding up the LLC
• Filing Articles of Dissolution with the New York Department of State

Amendments

• Procedures for modifying the Operating Agreement
• Requirement that amendments be made in writing

Management Options for New York LLCs

Member Managed

Members handle daily operations and have authority to bind the LLC. This structure is common for closely held companies. Voting rights typically align with ownership percentages unless changed in the agreement.

Manager Managed

Members appoint one or more managers to oversee daily operations. Managers may be members or nonmembers. Members retain authority over major decisions while delegating routine management tasks.

Creating and Maintaining the New York Operating Agreement

Drafting and Signing

The Operating Agreement must be adopted in writing within 90 days of formation. It becomes effective once approved by the members in accordance with the agreement’s terms.

Recordkeeping

The Operating Agreement must be kept with the LLC’s internal records. New York law requires it to be available for inspection by members.

Amending the Agreement

Amendments must be made in writing and approved according to the procedures stated in the Operating Agreement. Changes affecting filed information must be reported to the Department of State when required.