LLC Operating Agreement in Virginia 2024: An Essential Guide

Virginia Operating Agreement: What is an LLC Operating Agreement

Embark on your exciting entrepreneurial adventure in Virginia and strengthen your LLC foundation with a well-crafted Virginia LLC Operating Agreement. Discover the importance of this vital document, serving as your LLC’s backbone, through our informative guide. Become well-versed in the responsibilities, rights, and rules governing your business in Virginia.

Dive into the world of LLCs with our comprehensive guide to help you navigate the complexities of establishing and maintaining a successful business in Virginia. Trust LLCBase will assist you every step, from crafting a tailored Operating Agreement to mastering its nuances. Let’s set sail on this entrepreneurial journey and build a thriving LLC in Virginia together!

What is an Operating Agreement

An operating agreement is a legal document that outlines an LLC’s ownership structure, management, and operational procedures. It is crucial for businesses of all sizes and is a binding contract among the members. A well-drafted Operating Agreement can ensure the smooth operation of your business and minimize disputes among members. Although not required in every state, having an Operating Agreement in place is highly recommended, even for single-member LLCs.

An Operating Agreement in Virginia serves as a guideline for the LLC’s operations and provides a framework for resolving member disputes. It also establishes each member’s rights, responsibilities, and liabilities, helping protect their assets. It is a legally binding document. Creating an Operating Agreement tailored to your business needs and compliant with Virginia laws is essential.

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What Should an Operating Agreement Contain

An effective Virginia Operating Agreement should include the following key components:

Article I: Organization

This section outlines the essential details of your LLC, including its name, which should comply with Virginia naming requirements, its purpose, which should provide a clear and concise description of the business activities; and the principal place of business, specifying the registered office address within the state. When starting a business in Virginia, the effective date of formation should be included, as well as the duration of the LLC, whether perpetual or for a specific term. This article should also mention any relevant state-specific requirements, such as naming Registered Agent who will receive legal documents on behalf of the LLC.

Article II: Management and Voting

In this part of the Operating Agreement, the management structure of the LLC should be clearly defined, whether it will be managed by its members or designated managers. The decision-making process should be outlined, including how decisions will be made, the voting rights of each member, and any specific roles and responsibilities of the members or managers. Additionally, this section should include provisions for holding meetings, such as the frequency, notice requirements, and agenda preparation. Quorum requirements and the procedure for amending the Operating Agreement should be specified, which may require a supermajority or unanimous vote.

Article III: Capital Contributions

This section should detail the initial capital contributions made by each member, specifying the amount, form (cash, property, or services), and the percentage ownership interest in the LLC. The process for future contributions should also be outlined, including any conditions or requirements for additional contributions. Furthermore, the agreement should specify how additional capital will be raised, whether through loans, the issuance of new membership interests, or other methods. The valuation of contributions made in property or services should be addressed, ensuring a fair and equitable allocation of ownership interests.

Article IV: Distributions

This article should describe how profits and losses will be allocated among the members, which may be based on their capital accounts, ownership percentages, or a predetermined formula. The timing and manner of distributions should be specified, as well as any restrictions or limitations on distributions, such as maintaining a minimum capital balance. This section should also address specific tax-related issues, such as allocating tax credits and deductions, ensuring compliance with Virginia tax laws, and applicable federal tax regulations.

Article V: Membership Changes

An effective Virginia Operating Agreement should include provisions for handling changes in membership, such as the addition of new members, which may require the approval of existing members and the satisfaction of certain conditions. The withdrawal or death of a member should be addressed, outlining the process for buying out or distributing the departing member’s ownership interest. The transfer or sale of a member’s ownership interest should also be detailed, including any restrictions on transfers, rights of first refusal, or approval requirements to ensure the continuity and stability of the LLC.

Article VI: Dissolution

This final article should outline the circumstances under which the LLC may be dissolved, including a unanimous vote of the members, the occurrence of a specific event, or a court order. The procedure for winding up the business affairs should be specified, including the payment of outstanding debts and liabilities, the distribution of remaining assets among the members, and the preparation and filing of final financial statements. This section should also address any required notifications to government agencies, such as the Virginia Secretary of State, and the filing of any necessary documents to effectuate the dissolution, ensuring a smooth and legally compliant conclusion to the LLC’s existence.

Overall, crafting an operating agreement can be challenging and time-consuming; however, with the support of the best LLC formation services in Virginia, you’ll be able to create one smoothly and worry-free!

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How to Create an Operating Agreement in Virginia

Operating agreements are essential to the smooth functioning of a Limited Liability Company (LLC), as they outline the rules and regulations by which the company will operate. They also provide a legal framework for dispute resolution and define each member’s rights and responsibilities. Creating an operating agreement can be complex, but following these five steps will ensure a reliable outcome in Virginia.

1. Research Virginia LLC Laws and Regulations

Before drafting an operating agreement, familiarize yourself with Virginia’s specific LLC laws and regulations. Each state may have unique requirements for LLCs, such as annual fees, reporting requirements, and rules on allocating profits and losses among members. Consult Virginia governing agency responsible for business registration, such as the Secretary of State office, to obtain necessary information and guidance on state-specific rules.

2. Compile Essential Information and Documents

Before writing the operating agreement, gather all relevant information and documentation about your LLC, including:

  • Legal name of the LLC and principal location
  • Registered agent’s name and contact information
  • Name(s) of LLC members and their contact information
  • Percentage ownership of each member
  • Initial capital contributions of each member
  • Management structure (whether member-managed or manager-managed)
  • Anticipated distribution of profits and losses among members

3. Outline the Terms and Provisions

Craft a comprehensive outline of the key terms and provisions that will be included in the operating agreement. This should cover:

  • Operating capital and member capital contributions (both initial and additional)
  • Ownership percentage and sharing of profits and losses
  • Allocation of management responsibilities and decision-making authority
  • Voting rights of members and the procedure for voting on important matters
  • Rules governing admission and withdrawal of members
  • Dispute resolution process and dissolution procedures
  • Any other provisions relevant to the unique nature of your LLC

4. Draft the Operating Agreement

Using the outline and information you’ve gathered; create a comprehensive operating agreement tailored to the specific needs of your LLC in compliance with Virginia laws and regulations. It may be helpful to seek the assistance of an attorney or legal service familiar with Virginia business law. Make sure the final document clearly lays out:

  • The specific duties and responsibilities of LLC members
  • The detailed structure of management and decision-making authority
  • The specific allocation of profits and losses
  • The steps for handling disputes and potential dissolution

5. Review, Revise and Sign

Before finalizing the operating agreement, have all LLC members review the document to ensure they agree with its terms and conditions. Make any necessary revisions, and then have all members sign and date the agreement. Filing the operating agreement with Virginia governing agency is not typically required, but retain a signed copy for your LLC’s records and provide a copy to each member.

Completing these five steps will help you create a reliable operating agreement tailored to your LLC’s unique needs and compliant with Virginia’s laws and regulations. It will establish a clear framework for the operation and management of your business, ensuring a stable foundation for success.

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What to Do After Completing the Operating Agreement

Here are the things that you must do after completing the operating agreement of your Virginia LLC.

1. Execute the Agreement: After drafting your Operating Agreement, all members should review, sign, and date the document to make it legally binding. Notarizing the document for added legitimacy is good practice, although it is not a legal requirement in most states.

2. Distribute Copies: Provide each member with a copy of the signed Operating Agreement for their records. Keeping the original document in a safe and secure location, such as a company binder or a safe deposit box, is essential.

3. Register with State Agencies: Ensure that the appropriate agencies receive the document if your state requires you to submit a copy of your Operating Agreement during the LLC formation process or any subsequent filings. Check your state’s specific requirements to ensure compliance.

Guide When Starting an LLC in Virginia

Starting an LLC in Virginia after completing your operating agreement? You’ll want to follow this straightforward and well-organized step-by-step guide, making for a stress-free and enjoyable start to your business venture!

Step 1: Reserve Your Business Name

If you still need to form your LLC, reserve your desired business name with the 120 days to ensure it remains available. The fees for reserving a name online are $10, and for reserving by mail, the fee is $10. You can use the Virginia State Corporation Commission Entity Search to check the availability of your desired name before submitting the reservation request.

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Step 2: Register the LLC

Depending on your business activities and location, you may need to register your Virginia LLC with the Virginia Department of Taxation. This could include registering for the state income tax at the 6.00% and state sales tax at the 4.30%. Additionally, you may be required to pay an annual franchise tax, with a late filing fee of in Virginia, there is no late filing if not submitted on time.

Step 3: Obtain Business Licenses and Permits

Before you kickstart your operations in Virginia, it is crucial to understand and comply with all state and local requirements. This involves researching and obtaining all necessary permits and business licenses through the Virginia State Corporation Commission. The types of business licenses required may vary depending on the nature of your business. For instance, your business may require professional licenses, which ensures you meet the necessary standards and qualifications to provide your services. Further, if your business involves physical premises, zoning permits may be necessary to ensure your business activities align with the local zoning laws. The complexity may extend further if your business operations involve potential health hazards, requiring you to seek approval from the health department.

Non-compliance with these requirements could attract severe penalties and fines or even lead to the closure of the business. Therefore, keeping abreast of the latest changes is critical to ensure your business complies with applicable laws and regulations. Given the potential complexity of the regulatory landscape in Virginia, consulting with legal and business experts in the region might be beneficial. This approach could save time, reduce your liability, and contribute to the smooth operation of your business. So, to evade legal complications and unnecessary exposure to the risk of non-compliance, ensure thorough research and adherence to the state and local business requirements. It lays a strong legal foundation for your business venture, fostering a seamless startup experience in Virginia.

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Step 4: Get the EIN

The next step towards starting a construction company in Virginia is applying for an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). An EIN, also referred to as a Federal Tax Identification Number, is a unique nine-digit number that the IRS assigns to businesses operating in the United States for identification purposes. This number is essential for tax administration and must be included in your tax return forms. It is also needed when opening a business bank account and helps maintain a separate legal identity for your business.

There are two main ways in which you can apply for an EIN in Virginia – online and by mail. The online application process is simpler and faster. You can apply online on the IRS website if your principal business is in the United States. If you prefer to apply by mail, you must fill out Form SS-4, which you can download from the IRS website, and send to the IRS. Applying for an EIN is completely free of charge, and upon completion, your EIN is issued immediately when applying online. If you apply by mail, you can expect to receive your EIN within four weeks. Overall, obtaining an EIN is crucial in establishing a construction company in Virginia.

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Step 6: File the Annual Report

In certain states, maintaining the good standing of your LLC involves more than just staying compliant with given state regulations. You may also be required to submit an annual report to the state authorities; this is a general reporting requirement that details necessary information about your business, such as the names and addresses of members, the nature of the business, and changes, if any, to your LLC. This helps keep the state updated about your business’s operations and structure. The frequency of filing your report may vary depending on specific state requirements; it could be annually or every 1 year.

In Virginia, the process of filing an annual report also involves remitting a fee, known as the $50. This fee usually covers the cost of processing your report and maintaining your business record with the state. It’s crucial to note that failure to file your report or pay the necessary fees as stipulated might lead to penalties or, worse, administrative dissolution. Therefore, understanding your state’s specific requirements for maintaining your LLC’s good standing and diligently meeting these expectations is key for your business’s uninterrupted operation. It ensures you’re legally compliant and maintains your business’s credibility and reputation.

Step 7: Obtain a Certificate of Good Standing

In the business world, credibility and legal integrity play a significant role in attracting potential stakeholders. When establishing an LLC in Virginia, obtaining a Certificate of Good Standing can help validate your business’s compliance with state regulations. This crucial document confirms your company’s status as a legally recognized entity within the state, with up-to-date state-filed paperwork, no outstanding fees, and adherence to all necessary state requirements. Therefore, by presenting this certification, you demonstrate proactivity in maintaining good legal standing, bolstering your business’s credibility.

The Certificate of Good Standing serves more than establishing compliance. You might find it a necessary document for several important business activities. Compiled at the Virginia Secretary of State‘s office, it is a common requirement when opening a business bank account. Financial institutions must ensure your LLC’s validity before trusting it with a bank account. Beyond that, this certificate becomes even more critical if you plan to secure additional financing or find partners. It is proof of your business’s good legal health, positively influencing your company’s relationship with potential financiers or partners. Therefore, requesting the Certificate of Good Standing from the Virginia Secretary of State‘s office becomes an essential action point in your business setup checklist.

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Step 8: Open a Business Bank Account

To maintain the separation between your personal and business finances, open a dedicated business bank account for your LLC. This will make tracking expenses, managing cash flow, and maintaining accurate financial records easier. Many banks offer business accounts with various benefits and features tailored to the needs of small businesses.

Step 9: Maintain Ongoing Compliance

Ensure your LLC complies with state and local regulations, including timely filing annual reports, payment of required fees, and maintaining accurate records. Staying up-to-date with any changes to laws and regulations can help prevent potential legal issues and maintain your LLC’s good standing.

Following these steps after forming an Operating Agreement can ensure your LLC’s smooth and successful start. By staying compliant with state and local regulations, maintaining accurate financial records, and protecting your business with insurance, you can build a strong foundation for your company’s future growth and success.

Why Do I Need an Operating Agreement

1. Legal Protection: An Operating Agreement helps protect the limited liability status of your Virginia LLC, shielding your assets from potential business debts and liabilities. It also provides legal protection by outlining each member’s rights, responsibilities, and liabilities, minimizing the likelihood of member disputes.

2. Management and Operational Clarity: An Operating Agreement establishes your LLC’s management structure, whether member-managed or manager-managed. It also outlines the decision-making process, voting rights, and other operational procedures, ensuring clarity and consistency in the day-to-day management of your business.

3. Customization: An Operating Agreement allows you to tailor the rules and procedures of your LLC in Virginia to suit your specific business needs, rather than relying on default state laws that may not be a perfect fit for your company.

4. Credibility and Professionalism: Having a well-drafted Operating Agreement in place demonstrates your commitment to running a professional and legitimate business, making it easier to establish relationships with banks, investors, and other business partners.


What’s a Virginia LLC Operating Agreement?
A Virginia LLC Operating Agreement governs the relations between members concerning the operation of the LLC.
Is the Virginia LLC Operating Agreement required?
No, however filing it with the secretary of state would give it the benefit of enhanced liability protection.
Can the LLC Operating Agreement be oral?
No, Virginia requires the agreement to be in writing.
Can a Virginia LLC be managed by its members?
Yes it can, as noted there must be something included in Operating Agreement checklist otherwise Virginia defaults to management by manager
Does a Virginia Operating Agreement have to be filed with the state?
No, the Operating Agreement does not need to be filed but Virginia LLCs need to ensure that they update their Bylaws.
Are LLC members required to have an Operating Agreement in Virginia?
There is no legal requirement but it’s wise to create one.
What topics should be included in a Virginia Operating Agreement?
Ownership percentage, voting rights, profit/loss allocation, property rights, profit withdrawal policies, membership duties and resolutions giving forth Amendments.
Can the Virginia Operating Agreement be amended?
Yes, the agreement can be amended by filing signed documents by all members who have agreed to the changes.
Can members be admitted if they don’t sign an operating agreement in Virginia?
Yes, Virginia LLCs are formed based on the creation of their Articles of Organization so technically the other patterns ensues to determine rights and agreements of the deal.
Can a single-member LLC have an Operating Agreement in Virginia?
Yes, the particulars were well defined by 13.1-1042.B but indicating that any fewer number of members may execute this agreement with regard to operating the LLCs.
Where should Virginia LLCs’ operating agreements be kept?
These documents must be kept in an easily accessible place and that meeting with online repositories is allowed under Virginia law unless expressed in any Joint Protection Agreement.
Can you dissolve an LLC without an Operating Agreement in Virginia?
Yes, as long as the Articles of Organization are filed with Virginia, dissolution may be done by the Virginia Secretary of State.
Can lenders bypass Virginia Operating Agreement?
No lending financial institutions aren’t bound by an LLC’s Operating Agreement as operating agreement maps out the transactions neither act as an obligation to do so but rather eases governing and relations
Does an Operating Agreement bind third parties in Virginia?
Not natively acceptable terms, operating agreement tends to govern conflicts among members whereas Virginia LLCs apply Protocol to promote international integration and binding among outsiders among which LLC fall.
Who signs a Virginia limited liability company Operating Agreement?
Multiple Members tied in single business registered team forms an executing committee often make the signatures while drafting the Operating Agreement in the first place, Any subsequent changes entail members resolutions available in accompanying Section.
Can Operating Agreement be written after LLC formation in Virginia?
Preferred area to get it adopted at is pre LLC formation but yes, overboard court system authorities will execute it even after reporting incorporation documents given it fits categories of Virginia accepted laws and provisions.
Can there be more than one Operating Agreement for a Virginia LLC?
No, it is fitting the only operating agreement adopted by LLC thus following any other drafts will incite member’s resolution updates to the out of offset draft or just creating an entirely newer one.
Does the state of Virginia provide an Operating Agreement template?
No, However Virginia Registered agents generally provide this as part of their services.
Can you create an Operating Agreement for a Virginia LLC online?
Yes, LLC documentation providers employ various reputable companies permitting people to draft an online compliance store to create a business plan and other operations legally compatible to Virginia based LLC operating statues.
Is a notarised operating agreement required for Virginia LLCs?
There is technically no requirement by the Virginia Laws, but the additional formalities lend credibility and backing in higher law authorities holding all parties held power.
Choose two or more individuals to act as managers versus one- manager, which structure is beneficial among service-based LLCs of Virginia?
In online Private Limited Companies(Praction Edutech’s) enter businesses having commission earning agreement greater liquidity needed in having one of the individuals manage and enter payments as one individual. However, it depends on objectives.
Does Virginia operating agreement allow business managers given they are minimum wage quintessential to all tasks?
Sure but to a living wage working variable with the heads being termed Z-Managers acceptable under CIA protocol as at contract completion.
“Out clause” in an operating agreement violation in an LLC Virginia?
Authorizing compulsibly maintaining membership constitutional the specific guidelines, otherwise a mere severability clause harms initial operation of compliance sound LLCs.
For a Virginia LLC single member usage, is it substantial having membership-interest section limited in writing beyond numerous readjustments?
Code somewhat includes same powers encountered otherwise definitely giving an outlined deal or tailoring rules observed at executing LLC.
Allocation distribution based restatements of the Operating agreement of a Virginia second-generation LLC, is it legally preferred keeping terms of initial arrangement set after amendment subsequent to Application time?
Full court authorities’ directive quantifying its values for members holding partition “valuing likes”, however maybe treated particularly bad for initial member added later regarding protocol standards agreement.
Can disability modifications be defined specifying actions pre-pinched agreements rewriting business structure done in Virginia Operating Agreement in later years?
Much the pertinent addition should be relied on or accompanying recommendations with third persons becoming executor’ directives specifying areas noted by records updates in Virginia operating entity standards or set in Federal Guidelines.
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Does the Virginia-Dorothy Volz Nall checklist implementation affect the drafting of the LLC Operating Agreement?
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Can “bullet points” be applied in an Operating Agreement of Virginia notwithstanding written rules declared classified or if it’s outside the original state change over passive duties resolved in LLC year sale of stock records?
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Is it legally required including a compensation package in Virginia Operating agreement service entries while managing liability aspects of employees with IPOs happening afterwards for trace memory?
Completely new installation technique can help determine which much embraced positions countering problems alongside dealing with family industrial standard. Introducing decision based concepts and potentially adding IPOs will rely on creating partnership/company agreements structured through the LLC’S choice which depends on variables like growth projections affect Initial Permanent Set Up before any round-figure institutional transition addressing reasonably proper expectations.

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A well-crafted Virginia Operating Agreement is essential for the smooth operation of your LLC and the protection of your assets. By including these key components and tailoring the document to your specific needs, you can create a solid legal foundation for your business. It is highly recommended to consult with an experienced attorney or business professional when creating your Operating Agreement to ensure compliance with Virginia laws and regulations. With a comprehensive and effective Operating Agreement, you can focus on confidently growing and managing your business. To learn more about forming an LLC in Virginia, visit LLCBase.

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