Does an LLC Really Need an Operating Agreement? – Yes, But Avoid This Common Mistake + FAQs

Yes – every LLC should have an operating agreement, even if your state doesn’t strictly require it. An operating agreement is the internal rulebook for your Limited Liability Company (LLC), and it’s essential for both legal protection and smooth business operations. In most states you won’t file this document with the government, but skipping it is a mistake. It outlines how your LLC runs, how decisions are made, and protects your limited liability status. In short, while not always mandated by law, an operating agreement is critical for any LLC to avoid future conflicts and to legitimize your business.

Why your LLC needs an operating agreement:

• Protects your personal liability: It helps prove your LLC is a separate entity, so courts are less likely to treat you like a sole proprietor.
• Sets clear rules: It defines ownership percentages, decision-making power, profit distribution, and what happens if someone leaves or the business ends.
• Prevents default laws: Without one, your LLC will be governed by generic state default rules that might not fit your situation.
• Builds credibility: Banks, investors, and partners often expect to see an operating agreement to show your business is well-organized and professional.

Common Mistakes to Avoid with LLC Operating Agreements

When considering your LLC’s operating agreement, watch out for these pitfalls:

• Thinking you don’t need one: The biggest mistake is not creating an operating agreement at all. Even a single-member LLC benefits from having one in place. Don’t assume that being the sole owner or a close family-run business means you can skip it.
• Waiting too long: Avoid putting off drafting the agreement. It’s best to adopt an operating agreement as soon as the LLC is formed. If you wait until a conflict or big change arises, it might be too late to prevent problems.
• Using a generic template without customization: While templates can help, don’t just copy-paste a free operating agreement without tailoring it to your business. Boilerplate language might leave out critical details (or include irrelevant rules) for your specific industry, ownership structure, or state nuances.
• Not including key provisions: Be careful not to omit important terms. Common oversights include failing to specify how profits and losses are split, not detailing what happens if an owner wants to leave or dies, or ignoring how additional capital can be raised. These gaps can lead to confusion or disputes later.
• Failing to have all members sign it: An unsigned operating agreement is practically useless. Make sure every member (owner) of the LLC reviews and signs the final document. Not formally adopting the agreement can undermine its enforceability.
• Treating it as a one-time task: Don’t “set it and forget it.” Your operating agreement should evolve with your business. Failing to update it when circumstances change (like bringing in a new partner, changing the ownership percentages, or pivoting your business model) can cause the document to become outdated or contradictory to what’s actually happening.
• Overlooking professional review for complex arrangements: If your LLC has a complicated structure or multiple investors, don’t cut corners by avoiding legal advice. It’s a mistake to assume an online form can handle complex terms like preferred returns or detailed voting rights. While simple single-member LLCs might manage with a DIY approach, consulting an attorney for multi-member or high-stakes ventures is wise.
• Falling for filing service upsells: New business owners often get bombarded with offers for expensive “professional” operating agreements. Avoid automatically paying hefty fees to formation services that claim you must use their package. In reality, you can draft an operating agreement yourself or use reputable templates. Pay for expert help if you truly need customization, but don’t be misled into thinking an operating agreement must cost hundreds of dollars to be valid.

By steering clear of these mistakes, you’ll ensure your LLC’s operating agreement truly serves its purpose – protecting your business and its owners.

Key Terms Explained: LLC and Operating Agreement Basics

Understanding a few fundamental terms will help clarify why an operating agreement matters:

• Limited Liability Company (LLC): A flexible business structure that combines elements of corporations and partnerships. LLC owners (called members) enjoy limited personal liability for business debts. This means if the LLC faces lawsuits or debts, members’ personal assets are typically protected. An LLC is formed by filing Articles of Organization (or a Certificate of Formation) with your state, which is a simple document to officially register the business.
• Operating Agreement: A private contract among an LLC’s members that outlines how the company is run. It covers each member’s ownership percentage, rights, and responsibilities, how profits and losses are divided, how decisions are made, and what happens if someone leaves or the company dissolves. Think of it as the rulebook or constitution for your LLC’s internal operations. (It’s similar to corporate bylaws for a corporation, but for an LLC.) The operating agreement is not filed with the state; it’s kept in your records as an internal governing document. In some states, this may also be referred to as a “company agreement” or “LLC agreement,” but it means the same thing.
• Articles of Organization vs. Operating Agreement: These are not the same. Articles of Organization (sometimes called a Certificate of Formation) are the documents you file with the state to create the LLC legally. They usually include basic info like the LLC’s name, address, registered agent, and sometimes management structure. The Operating Agreement is not part of the public filing – it’s the detailed agreement between owners on all the day-to-day and big-picture rules. In short: the Articles register your LLC with the state; the Operating Agreement governs how your LLC actually operates.
• Member: An owner of an LLC. Members can be individuals or other companies. An LLC can have one member (single-member LLC) or many members (multi-member LLC). The operating agreement should list all members and their ownership stakes.
• Manager-Managed vs. Member-Managed: These terms describe who runs the LLC. In a member-managed LLC, all members share management and decision-making power (default for most small LLCs). In a manager-managed LLC, the members appoint one or more managers (who can be members or an outside person) to handle day-to-day operations, similar to a CEO or director. The operating agreement specifies which structure you’re using and defines the managers’ powers. This is important because banks or partners will know who is authorized to sign documents or contracts on behalf of the LLC.
• Limited Liability (concept): The core benefit of an LLC is in its name – limited liability. This means each member’s personal assets (house, personal bank accounts, etc.) are generally protected from business liabilities. However, to maintain this protection, the LLC must be operated as a distinct entity. That’s where things like separate bank accounts, proper records, and having an operating agreement come in. An operating agreement helps demonstrate that the LLC is a legitimate independent business, not just an “alter ego” of its owner. This strengthens the liability shield.

By knowing these terms, you can better appreciate how an operating agreement fits into the picture and why it’s so crucial for your LLC’s success and protection.

Examples: Why Having (or Not Having) an Operating Agreement Matters

To grasp the practical importance, consider these common scenarios for small businesses and how an operating agreement (OA) – or the lack of one – can impact each situation:

As these scenarios show, having a solid operating agreement can make or break real-world situations. Whether it’s preserving your liability shield as a solo owner, keeping peace between multiple partners, or impressing a bank or investor, the operating agreement is the tool that ensures your LLC runs as intended without unwelcome surprises.

The Legal Reality: Are Operating Agreements Required?

Legally, an operating agreement occupies a somewhat unique space: it’s fundamental for your LLC’s structure, but often not required to be filed with any government agency. Here’s the breakdown of the legal perspective:

• State laws vary: LLCs are creatures of state law, and each state sets its own rules. In most states, you are not legally required to have a written operating agreement. You could technically operate an LLC without one and not be violating any filing requirement. However, a few states do mandate an operating agreement (or at least strongly require one) as part of the LLC’s formation or maintenance. For example, California, New York, Missouri, Maine, and Delaware have laws that require LLC members to enter into an operating agreement (some allow it to be oral or implied rather than written). If you form an LLC in those states, you should definitely create one to stay compliant.
• No state requires filing the agreement: Even in states that require an operating agreement, you do not file this document with the Secretary of State or any government office. It’s kept internally. The state’s concern is simply that you have one. Typically, you would adopt the operating agreement and store it with your LLC’s business records (and give copies to all members). This also means the operating agreement is not public – unlike your Articles of Organization which are public record, the operating agreement’s contents remain private to the owners.
• Default rules kick in if no agreement: Just because most states don’t force you to have an operating agreement doesn’t mean you’re off the hook legally. If you don’t have one, your LLC will automatically be governed by the default provisions in the state’s LLC statutes. These default rules are generic one-size-fits-all guidelines provided by law. Often, they might not reflect what you and your partners actually want. For instance, a state’s default rule might split profits equally among members, even if one member contributed 90% of the capital. Or it might say that any member can bind the LLC to contracts, which you may not be comfortable with. Having your own operating agreement allows you to override those defaults with terms that make sense for your business.
• Maintaining your limited liability protection: There’s no explicit law saying “no operating agreement = no liability protection,” but in practice, not having one can weaken your liability shield. Why? If your LLC ever faces a lawsuit, one thing courts examine is whether the business is run separately from the owners’ personal affairs. Not having basic documentation (like an operating agreement) or not following any formal process can make it look like the LLC is just a sham. While LLCs have fewer formalities than corporations, courts have explicitly noted that an operating agreement helps demonstrate the firm separation between the member and the company. In a worst-case scenario, if you treat the LLC too informally, a plaintiff could argue to “pierce the corporate veil,” potentially making you personally responsible for business debts. An operating agreement alone won’t guarantee protection, but it’s a key part of showing you respect the LLC as a separate entity.
• Evidence in disputes: If there’s an internal dispute (say, two members disagree on an important decision or on their profit share), the operating agreement is a legally binding contract that the courts will look at to resolve the issue. Without it, the court falls back on state law or hears each person’s interpretation of unwritten arrangements, which can be messy and unpredictable. Judges and arbitrators prefer to see an agreement. In fact, having a written operating agreement can keep you out of court in the first place – it’s much easier (and cheaper) to point to a clause in your agreement than to litigate a he-said/she-said scenario under default rules. Many attorneys note that the cost of drafting a solid operating agreement is tiny compared to the cost of litigating owner disputes after the fact.
• Minor cost, major benefit: Legally speaking, there’s almost no downside to creating an operating agreement. It doesn’t have to be filed, it doesn’t incur a state fee, and you can draft one relatively inexpensively (even free, if you do it yourself carefully). The only “cost” is the time and possibly money spent to prepare it. Some business owners worry about the hassle or the formality, but this is a one-time effort that can save enormous headaches later. In the eyes of the law, you’re basically hardening your LLC’s legal foundation by putting one in place.

In summary, **the law might not force you to have an operating agreement in most cases, but it will default to one for you (through state statutes) if you don’t make your own. It’s far better to write your own rules than to be at the mercy of generic laws. And if you ever want to fully leverage the liability protection and flexibility an LLC offers, having an operating agreement is the smart legal move.

Business Strategy Advantages of an Operating Agreement

Beyond legal requirements, an operating agreement provides a slew of business and strategic benefits for your LLC. It’s not just about legal fine print – it’s about setting your business up for success. Here are key strategic advantages:

• Clarity in Roles and Decision-Making: When you draft an operating agreement, you and any co-owners are forced to discuss and decide who does what in the business. This clarity prevents power struggles and confusion. Everyone knows their responsibilities, how day-to-day decisions are handled, and how major decisions (like taking on debt or changing the business direction) will be made. Clear structure is critical for a smooth operation, especially as your business grows. Even for a single-member LLC, writing down how you’ll operate (for example, separating your finances, or deciding on a salary vs. draws) can instill discipline and a clear plan for yourself as the owner.
• Alignment of Expectations: Setting up an operating agreement early on acts as a strategic planning session for co-founders. You’ll cover scenarios like expansion, bringing in new partners, or exit strategies. This ensures all members are on the same page about the business’s direction and values. It’s much better to discover and resolve any differences in vision at the start by talking them through and writing agreed terms, rather than discovering a serious conflict a year into operations. In essence, the process of creating an operating agreement fosters honest conversations that align the owners’ expectations — a cornerstone for any successful partnership.
• Flexibility to Suit Your Business Model: One of the great strategic benefits of an LLC is the flexibility to design your own operating rules. A thoughtful operating agreement lets you customize the governance to match your business strategy. For example, maybe your strategy is to reinvest all profits for the first two years and not take any distributions; you can include that understanding in the agreement. Or if one member is contributing sweat equity and another is contributing capital, you can allocate profits in a way that isn’t strictly tied to ownership percentages. You can also outline different classes of membership if you plan to have passive investors versus active managers. This flexibility means your business can operate in the way that best achieves your goals, rather than following a standard mold.
• Easier Scaling and Growth: If you plan to grow, an operating agreement makes expansion more straightforward. Want to bring in a new partner or investor? You can include provisions for how a new member can be admitted and how their share is determined. This way, when an opportunity comes to onboard a new investor or a key employee as a part-owner, you already have a roadmap for how to do it. Your growth won’t be stalled by internal uncertainty. Similarly, if you aim to open new locations or segments of the business, having formal processes can help replicate your successful model consistently.
• Professionalism and Credibility: From a strategic standpoint, how others perceive your business can make a big difference. An operating agreement gives an impression of professionalism to outsiders. When potential clients, partners, or investors know that you have your governance documented, it builds trust. It signals that you run a legitimate operation with foresight and stability. This credibility can be a subtle but powerful competitive advantage, especially for small businesses trying to win contracts or deals — you’re showing that even though you’re small, you’re serious and well-organized.
• Banking, Loans, and Vendor Relationships: Strategically, the day will likely come when you need to open a bank account under the LLC, secure a line of credit, or establish accounts with vendors. Banks almost always ask new LLCs for an operating agreement to verify the business details: Who are the owners? Who has authority to make financial transactions? By having your operating agreement ready, you accelerate these financial transactions. You won’t scramble or face delays providing documentation. Some vendors or landlords (if your LLC is signing a lease) might also request to see parts of the operating agreement to ensure the person signing is authorized. Being able to confidently produce this document can streamline negotiations and agreements in the course of doing business.
• Disaster and Succession Planning: A smart business strategy includes planning for the unexpected. An operating agreement can contain buy-sell provisions or succession plans that activate if something goes awry. For example, if a member suddenly passes away, the agreement might grant the LLC or remaining members the option to buy that member’s interest from their estate (preventing an unwanted third party from suddenly becoming your partner). Or it might state that if an owner gets divorced, any ownership transferred in a divorce settlement must be offered back to the LLC or other members first (to keep ownership stable). These kinds of clauses are essentially contingency strategies that protect the business’s continuity. Thinking through worst-case scenarios and writing down solutions is a hallmark of strategic risk management. It ensures your business can survive changes in membership or ownership without falling apart.
• Reinforcing Business Identity for Taxes: While more of a legal-tax crossover, there’s a strategic tax angle as well. The IRS and state tax authorities don’t require operating agreements, but if you ever face an audit, having one can help demonstrate that your venture is a real business and not a hobby. For instance, claiming business deductions and upholding the corporate veil in tax matters is easier when you can show you treated the business formally (by having an operating agreement, separate accounts, minutes of key decisions, etc.). Strategically, you want the IRS to see your LLC as a bona fide business entity; an operating agreement is one of several indicators of that. This supports your tax positions and can avoid having certain deductions disallowed by an auditor who thinks you weren’t acting like a real business.

In summary, an operating agreement isn’t just a checkbox for legal purposes – it’s a strategic tool. It forces you to plan, it smooths the path for growth and external deals, and it protects the business’s future. Small business owners who leverage their operating agreement this way often find that it helps them run their company more intentionally and effectively. It’s like having a playbook for success, agreed upon from the start.

Operating Agreement vs. Other Business Documents

It’s easy to get confused by various business documents. To put the operating agreement in context, here’s how it compares to other common documents in a small business:

• Operating Agreement vs. Bylaws (Corporation): If you’ve heard of corporate bylaws, know that bylaws are to corporations what operating agreements are to LLCs. Both are internal governing documents. The difference is an LLC is governed by the flexible terms of its operating agreement, whereas a corporation is governed by its bylaws and more rigid corporate laws. Bylaws typically outline things like how a board of directors is elected, how shareholder meetings are conducted, officer roles, etc. An LLC usually doesn’t need that level of formal structure. Operating agreements are generally more flexible and customizable than corporate bylaws. Importantly, neither operating agreements nor bylaws are filed with the state; they’re kept internally. If you converted your LLC to a corporation one day, you’d swap your operating agreement for bylaws as the governance document.
• Operating Agreement vs. Partnership Agreement: If your business had been a general partnership instead of an LLC, you would ideally have a partnership agreement to set the rules among partners. An LLC’s operating agreement serves a very similar purpose (defining ownership stakes, roles, profit sharing, etc.), but the key difference is the legal structure around it. LLC members have that liability protection and a formal entity, whereas partners in a general partnership do not. Many folks choose the LLC route precisely to get those liability protections, and the operating agreement is a tool to harness the benefits of partnership-style flexibility within the LLC framework. In short, both documents are about internal rules, but an operating agreement is tied to an actual legal entity that stands apart from its owners.
• Operating Agreement vs. Articles of Organization: As defined earlier, Articles of Organization are the public filing that creates your LLC in the eyes of the state. It’s a short document—often just a page or two—that you submit to the state’s business filing office. It registers basic facts like the LLC’s name, address, registered agent, and sometimes management structure. The operating agreement, by contrast, is much more detailed and is kept private. Think of the Articles as the birth certificate of the LLC, and the Operating Agreement as the owner’s manual. Both are important: one legally births the company, the other describes how the company will live its life.
• Business Licenses or Permits vs. Operating Agreement: Sometimes new owners confuse an operating agreement with things like a business license, especially since both might be needed when starting up. A business license (or permit) is something you might need to obtain from a city, county, or state to legally operate certain types of business (for example, a license to run a restaurant or to engage in contracting work). It’s not related to the internal governance of your company. The operating agreement, on the other hand, doesn’t grant you permission to do business (the state does that when it approves your LLC filing); instead, it governs how you do business internally. So, these documents serve entirely different purposes. Both should be on your checklist: one for legal compliance to operate, and the other for internal clarity and protection.
• Minutes or Resolutions: Corporations are required to keep minutes of board meetings and have formal resolutions for key decisions. LLCs are generally not required by law to keep minutes or pass formal resolutions in the same way. However, your operating agreement might encourage or require some documentation of major decisions (and it’s good practice to have a written record when big things happen, like taking on a loan or changing ownership percentages). If your LLC chooses to document decisions, those minutes or written consents are separate documents, but they work hand-in-hand with the operating agreement. For example, the operating agreement might say “any loan over $50,000 requires approval of all members,” and then when that situation arises, you’d draft a resolution or consent for everyone to sign off. The operating agreement is the rule-setting document, while minutes/resolutions are records of following those rules in specific instances.

By understanding these comparisons, you can clearly see that an operating agreement stands at the center of your LLC’s governance. It doesn’t replace other obligations like filings or licenses, but it complements them by filling in the details of how your company functions day-to-day and in extraordinary events. Essentially, if you have an LLC, the operating agreement is the document that ties everything together—making sure that the legal entity created by your Articles is managed in a way that suits your business needs and aligns with other legal documents.

FAQs

Do I need an operating agreement for a single-member LLC?
Yes, you should have an operating agreement even if you’re the only owner. A single-member LLC can sometimes be viewed with skepticism without one – it might just look like an alter ego of you personally. By writing an operating agreement, you formalize the separation between you and the business. This helps preserve your limited liability protection. It also lays out what happens to the business if you can’t run it (for example, due to illness or death). Moreover, banks and auditors may still ask for your operating agreement as proof of your LLC’s structure. It’s a relatively simple document to create for yourself, but it adds significant credibility and protection.

What happens if my LLC doesn’t have an operating agreement?
If you don’t have an operating agreement, your LLC will default to your state’s LLC laws for its rules. Your business can still operate, but you have less control over how things are decided. For example, state law might give all members equal rights and shares by default, which could be an issue if one person invested more or if you intended a different arrangement. In the absence of an agreement, resolving disputes can be harder – you’ll end up relying on statute or courts to fill in the gaps. Not having an operating agreement can also make your business appear less legitimate to banks, partners, or courts. Essentially, you’re leaving critical decisions and protections up to chance and generic laws, rather than defining them yourself.

Is an operating agreement legally required to form an LLC?
In most states, no. You can form an LLC by filing the required paperwork (Articles of Organization) and paying the fee, without submitting an operating agreement. However, a few states do require that you have an operating agreement (for instance, New York mandates a written operating agreement, and California requires an operating agreement though it can be oral). Even in those states, you don’t file the agreement with the state; you just need to have it. Regardless of legal requirement, it’s strongly recommended to create one. Think of it this way: it might not be required to start your LLC, but it’s effectively required to run your LLC properly.

Does an LLC operating agreement need to be notarized or filed with the state?
No, typically you do not need to notarize an operating agreement or file it with the state. The operating agreement is a private document. Once all the LLC members sign it, it’s considered legally binding. Notarization is generally optional; the signatures make it enforceable, and having the date on it is helpful. You just keep the signed agreement in your business records (each member should retain a copy as well). The only time you might consider notarizing is if your bank or a particular transaction requires evidence that the signatures are authentic, but this is uncommon. The state doesn’t review or record your operating agreement – they only care that you have one if your state’s laws call for it.

Can I write an operating agreement myself, or do I need a lawyer?
For a simple LLC, especially a single-member LLC, you absolutely can write it yourself using a trustworthy template or guide. Many small business owners do this to save cost. Just be sure to use a template from a reputable source and fill in all relevant details (don’t leave sections blank or generic if they need specifics about your business). Read it thoroughly so you understand what it says – it’s your rules for your company. That said, if you have multiple members or complex arrangements (like investors who want special terms, or complicated profit-sharing setups), it’s wise to consult a business attorney to either draft it or review your draft. A lawyer can ensure the language covers all scenarios and complies with your state’s laws. Think of it as an investment in preventing future disputes. In short: you don’t need a lawyer for basic situations, but professional help can be very valuable for more complex ones.

What should I include in my LLC’s operating agreement?
At minimum, include the basics of how your LLC will operate. Key sections typically cover: ownership (who the members are and their percentage or units of ownership), management (is it member-managed or manager-managed, and who the managers are), voting rights (how decisions are made – e.g., majority vote, unanimous for certain big decisions), profit and loss distribution (how and when profits will be distributed to members, and how losses are shared), capital contributions (who contributed what to the business initially, and the process for additional contributions or raising more capital), membership changes (what happens if a member wants to sell their interest, dies, or if new members join – often buyout provisions or rights of first refusal are set here), dissolution (the process for dissolving the LLC if the members decide to close the business), and any other special agreements (like non-compete clauses for members, management duties, or dispute resolution methods such as mediation/arbitration). You can also state which state’s law governs the agreement (usually the state where you formed the LLC). It sounds like a lot, but many standard operating agreement templates will have these sections ready for you to fill in. The goal is to cover common scenarios and ensure everyone knows the rules.

Do I need a new operating agreement if I expand to another state or change my business?
Your operating agreement should always reflect the current reality of your business, but you usually don’t need a brand new agreement just for registering in another state. If your LLC expands operations to a new state (as a foreign LLC registration), your existing operating agreement typically remains in force. You might add an amendment if there’s something state-specific to address or if you want to note the expansion, but generally the internal rules stay the same. If you significantly change your business structure – say you bring on new members, change from member-managed to manager-managed, or overhaul your profit-sharing arrangement – then you should update your operating agreement. This can be done by adding an amendment or restating the agreement in full with the new terms. Always follow any procedures in your current agreement about amendments (some require a certain vote to amend). Essentially, whenever your LLC’s structure or ownership changes materially, revisit the operating agreement and adjust it so it’s up to date. This keeps it accurate and enforceable.

Can an operating agreement be changed once it’s in place?
Yes, an operating agreement is not set in stone forever – it can (and should) be changed when needed. To change it, the members of the LLC typically must agree to the amendments. The procedure for amendments is often described in the operating agreement itself. For example, it might say something like “this agreement can be amended by a unanimous vote of the members” or maybe a majority vote if that’s how you set it. When changes are agreed upon, you’ll document them in a written amendment that all members sign, and attach it to the original agreement (or you can draft a whole new revised operating agreement). Common reasons to amend include adding a new member, one member leaving, changing how profits are distributed, or updating roles and responsibilities. Always make sure any changes are documented in writing and signed, just like the original agreement. Verbal changes or informal understandings won’t override the last signed agreement if a dispute arises.

Is an operating agreement the same as an LLC’s “bylaws”?
For an LLC, the term “bylaws” isn’t technically correct – bylaws are for corporations. The operating agreement serves the equivalent function in an LLC. Both documents outline internal rules and governance. If you hear someone refer to “LLC bylaws,” they likely mean the operating agreement. In short: LLC = Operating Agreement, Corporation = Bylaws. Both are internal, unfiled documents, but their content is tailored to the type of entity. LLC operating agreements tend to be more flexible and can be adjusted to fit the members’ wishes, whereas corporate bylaws must align with more stringent corporate statutes and involve formal structures like boards and shareholder meetings. So, if you’re forming an LLC, you don’t create bylaws – you create an operating agreement to set the rules.

How does an operating agreement affect my taxes?
By itself, an operating agreement doesn’t change how your LLC is taxed, but it can reinforce your tax positions. The IRS by default treats a single-member LLC as a sole proprietorship (disregarded entity) and a multi-member LLC as a partnership for tax purposes (unless you elect to be taxed as an S-Corp or C-Corp). Your operating agreement can include provisions about tax matters – for example, it can specify how allocations of taxable income and tax distributions are handled among members. This is especially important in multi-member LLCs to make sure everyone has funds to pay taxes on their share of profits (even profits that are allocated but not distributed as cash). If you elect S-Corp status, your operating agreement might note the special rules (like only one class of members, etc.).

During an audit, having an operating agreement that lays out the financial and management structure can help demonstrate to the IRS that your business is legitimate and that allocations of income or losses have a bona fide basis. In summary, the operating agreement supports your tax strategy by formally documenting agreements on profit allocation, but the act of having one doesn’t by itself change your tax classification (you handle that via IRS forms like Form 2553 for S-Corp election, not via the operating agreement).