New Jersey LLC Operating Agreement Drafting Details, Cost and Much More

An operating agreement can prove to be crucial for every New Jersey LLC owner. This agreement can put rules and regulations in place for the firm to follow. The state does not legally require every LLC to file an operating agreement, but it does help owners protect their business. Our guide will help you through how you could start with the New Jersey LLC operating agreement.

What is New Jersey LLC Operating Agreement?

A New Jersey LLC operating agreement is simply an internal document that highlights different details of the LLC. These details mainly include the LLC ownership, voting rights, and member details like address, responsibilities, power, etc. Apart from this, the operating agreement also includes information about probable circumstances. For example, what would happen if one of the members leaves the firm in the future, how to divide profit among members, etc.

Why Do I Need an Operating Agreement?

If you read how to start an LLC in New Jersey then you would know why everyone usually drafts their operating agreement. Even though the state does not legally ask for operating agreements from New Jersey LLCs, they come in handy under many circumstances. It is recommended to draw up an operating agreement for the following reasons:

  • It allows LLCs to resolve conflicts in the future where the agreement is a guide.
  • Single-member LLCs can create this agreement to protect their LLC status and differentiate themselves from a sole proprietorship.
  • In absence of an operating agreement, LLCs must follow the default guidelines from the state to run their business.
  • Operating agreement is also eligible as proof in the court if required.

What Should You Include in the NJ Operating Agreement?

After you register your New Jersey certificate of formation with the secretary of state, drawing up your operating agreement would be the next thing to do. It may take some time as you need to understand what should be included and how could you personalize it to avoid conflicts in the future.

What to include in operating agreement

  1. Ownerships: You need to mention the owners of the LLC. Along with how the ownership is divided between members.
  2. Capital Contributions: Mention how much was the investment and how much each member contributed to the LLC.
  3. Management & Voting: You must mention who will manage the LLC, and how the voting rights are distributed among the members, along with its complete details.
  4. Profits & Losses: Basically, you must also ready yourself for the best and the worst cases your LLC might run into. Mention the distribution percentage when the LLC makes a profit or loss.
  5. Membership Structure: Clarify the hierarchy in the LLC and also mention under what circumstances a change in the structure may become a necessary step. Along with this, mention any change in the roles and responsibilities as well.
  6. Dissolution: If you are either ordered by the state or by choice, choose to dissolve the LLC, you should outline the complete process and in what ways the members will be responsible.

Including such vital information in your New Jersey LLC operating agreement can benefit you under different circumstances in the years to come. This goes for both single and multi-member LLCs, the information will vary but the structure will remain the same. You can also use the agreement template by the government.

Will My Operating Agreement Be A Public Record?

No! Your LLC operating agreement is strictly an internal document and should not be shared with anyone. It provides crucial company information that should be restrictive. Remember you are not legally obliged to file the agreement with the New Jersey secretary of state. Therefore it won’t be available on any public record.

Who May Ask For My NJ Operating Agreement?

Primarily, you must only share the operating agreement with the selected members of your LLC. Although, there are some instances where you might need to present your New Jersey LLC operating agreement. You might need to show the agreement to your investors or at the time of opening a business bank account. In some cases, the document can prove to be helpful during court proceedings.

Why to Professionally Draft LLC Agreement?

Why Professionally Draft Operating Agreement

Although this being an internal document, we would recommend every LLC to professionally draft your New Jersey LLC operating agreement. This is so because we might not know what would be the most effective way to draft an operating agreement. As this operating agreement would be a useful tool in the future, you would want every piece of information to be precise. Hence to draft it professionally would be the best way to go forward.

Cost For New Jersey LLC Operating Agreement

You can draft the operating agreement for $0 if you yourself draft the operating agreement. Another option for you could be to hire an agency to professionally draft the agreement for you. In some cases when you hire an agency to register your LLC in New Jersey then they may draft the operating agreement for free. You can also take help from your New Jersey registered agent in such a case.

Can I Revise My NJ Operating Agreement?

When you create your New Jersey LLC operating agreement initially, you are required to get the signature of all the members to make it legal. Hence, even in the case of revising or changing your agreement, you would need the approval of all the members who initially put their signatures. You can then change any of the information within the agreement. There is also no time restriction within which you must make the changes.

What If I Don’t Create My Operating Agreement?

The operating Agreement’s main purpose is to protect the business from internal conflicts. In absence of an operating agreement, it makes your LLC open to other liabilities. There won’t be any legal obligation on you if you do not create your agreement but it will certainly not benefit you in any way. Some may also decline your business bank account request if you do not provide the operating agreement.

Frequently Asked Questions

1. Is operating agreement required in New Jersey?

The state does not legally require LLCs to file the operating agreement. Although it is recommended to create an operating agreement for multiple benefits.

2. Does single member LLCs require operating agreement?

Yes! it is more important for single members because it helps them to maintain the LLC status.

3. Is there any charges to revise the operating agreement?

When you create it on your own there will be no charge, although if you revise it from a professional, he or she might charge you a basic fee.

4. Will my LLC be legal without an operating agreement?

Yes! your LLC can legally operate as the agreement is just an internal document to resolve conflicts and help with other information about the LLC.


As we discussed the importance of the New Jersey LLC operating agreement, we would like to highlight again that legally no LLCs are required to draft an operating agreement. Although, drafting it protects your LLCs and their members from future conflicts. Along with this, you might also need this document for other purposes like opening a bank account or proof for court proceedings.

You will mostly find every business with its operating agreement because of its functionality. If you are looking to create your operating agreement before filing your LLC, you must perform the New Jersey business entity search to be sure that your LLC name is available.

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