Indiana LLC Operating Agreement Templates | How to Start LLC

An Indiana LLC Operating Agreement is a document that details the order of operations, company profile, and other relevant information that investors, banks, and other people associated with the business can use to evaluate the company properly.

It also offers the members of a business a proper outline of the company’s operational procedures and other aspects regardless of the business size. Furthermore, the Indiana LLC operating agreement is under the Limited Liability Laws in Title 23, Article 18.

It has other supporting laws such as Operating agreement IC 23-18-4-4 and state definition laws in Code § 23-18-4-4, detailing how each aspect of your business will be run and how your LLC will be managed.

It is best to create an Indiana LLC operating agreement when you are newly starting out your LLC. It is advisable to create the operating agreement when filing your Articles for the Organization with the secretary of state in Indiana. Getting a written agreement provides ample protection for your company and prevents any legal issues in the future.

Indiana does not require this document; however, it is advisable to have it to stay clear of any legal issue.

The formation of an LLC in Indiana costs $100 by mail and $95 online; these are one-time fees. For a business entity report, it costs $50 by mail or $31 online in Indiana. More importantly, this fee is paid every two years.

Indiana LLC Operating Agreement comes in two following forms depending on your business structure:

Why an Operating Agreement?

An Indiana LLC agreement offers businesses a solid platform to operate in the state; the agreement allows for transparency and effectiveness in running a business. Besides providing a transparent and effective mode of operation for your business, there are other reasons for creating an LLC operating agreement in Indiana.

Resolve disputes

When running your Indiana LLC, you have to consider that the members have different backgrounds, business mentalities, financial capabilities, and other disparities. More so, with these differences, there comes a time when disputes may occur. Therefore, your Indiana LLC operating agreement will document all reports on profit sharing, managerial roles, and other company internal regulations. This will ensure that the disputes are promptly resolved.

Flexible LLC

Creating your Indiana LLC operating agreement can help you run your business the way you have always intended instead of conforming to rigid rules and regulations. You can draft what is best suited for you to achieve your goal and objectives.

Protect LLC status

Your Indiana LLC Operating agreement can save you from legal hassles. It is a document that tells the court and other authorities that your Limited Liability Company is governed by a set of rules that need to be consistently upheld.

Financial accounts

Banks and other financial companies may request evidence of an operating agreement for your Indiana LLC. The LLC operating agreement adds to the credibility of your name when you are looking to open an account or request funding for a project.

Rules

Every business needs to run on a clear set of principles, precepts, rules, or regulations that ensure every member understands the full extent of their operations.

Recommended by state

The state of Indiana does not mandate that you have an LLC operating agreement; however, it is recommended for the smooth running of your business. It will help expedite many operations for you, including loans, investments, profit sharing, and dealings with the state.

It is advisable for all Indian LLCs to provide a written operating document that clearly states the business model of operations in accordance with the Indiana code section 23-18-4-4.

For your Indiana LLC pertaining agreement to be credible and respected by authorities, certain information needs to be included. This information will serve as an answer to any question that banks, investors, and other authorities may have concerning your business.

LLC name

Whatever name you filled in your Indiana Article of Organization, ensure that it tallies with what you have as your LLC name. In addition, the proper LLC designator has to be included for easy reference.

Ownership details

If you run a single-member LLC in Indiana, you should state that in your agreement. If you have a multi-member LLC, then it is best to state the percentage of ownership or the ownership stake of each member that has been appointed.

There is a distinction in the Multi-member form of agreement. We need to look at two types: the manager-managed and the other is member-managed. The former relates to the appointment of a manager by the executive members of the company. The latter relates to having all the members manage the company with different ownership stakes and jurisdiction.

Member duties

This section should adequately spell out each member’s role in the organization. This will remove any form of confusion and resolve conflicts at a faster rate. In addition, each member’s name should be detailed with their initial contributions and other relevant information that ties them to the company.

Additionally, there are incomplete clauses that are included in some operating agreements. The essence is to ensure that the business is protected even if a member leaves or decides to start another company. Finally, it is in your best interest to include the members that have the liberty to make absolute decisions and speak on behalf of the business.

Voting structure

How do you decide on the voting structure, do people with the highest percentage get higher votes than others? Whatever your voting structure is, you should detail it in your Indiana LLC operating agreement. More importantly, include what happens when there is no unanimous decision.

Capital contribution

Include the names and the various contributions of the members in the operating agreement. Then, you can decide whether you are going to accrue special responsibilities to people with higher contributions or the other way round.

Profit distributions

If you intend to share the profit, let the percentage be indicated in your Indiana LLC operating agreement. This will aid comprehension and help you avoid any issues. The profit distribution could be based on the ownership percentage of each member, but it is also important that you specify the amount regardless of how you choose to split the profit.

LLC should also include when the profit should be shared to avoid any controversy; hence it is important to have an esteemed accountant or legal practitioner to aid this process.

Possible modifications

This shows how a new member can join your Indiana LLC once you have set out the rules for entry into the Organization. Then you can look at how people can exit. Plus, you need to specify the financial criteria for people to better understand the process in both aspects. Finally, if someone dies, you need to know what to do with the person’s ownership stake.

Holding meetings

With COVID 19 disrupting how businesses work, some Indiana LLC may define their meetings as virtual to keep social distance. You can manage and schedule meetings any time you want as long as the members agree with it. Members can specify the precise time and date of meetings for other members to be present.

Record management

Records help reduce the stress and strain on your operations and allow you to run the organization smoothly. The business will have important files that detail the decisions and amendments to the operating agreement through record-keeping. This will prove to be vital in any legal case in the future.

HR policies

The documentation of human resources policies can help in structuring how employees can be treated. In addition, the LLC operating agreement can have the details of inclusion and diversity, paid time off, and other aspects of employee life.

Operational rules

It is best to have the operational rules as part of the operating agreement, showing how the business should be run.

Single-member LLC designation

There needs to be a distinction between your single-member LLC and sole proprietorship. It is in this section that you can let people know. Show that you own 100% of the profits and other aspects of the business.

This shows that you are the owner of the business and you bear 100% of the responsibility and profits of the business. Hence, specifying this will ensure authorities properly recognize your business as yours.

Severability provision

To not offer any ambiguity, the severability provision relates to the credibility of the operating agreement. It means that if there is an error in any part of the Indiana LLC agreement, the entirety of the agreement is still valid regardless.

How to File for LLC status?

New Indiana LLCs sometimes find it difficult to file for LLC status, whether foreign or domestic LLC. However, the information below clearly states whether you have an LLC in Indiana or your LLC is an extension you want to extend in Indiana.

Registered agent

As an Indiana LLC, you need to have a registered agent who can contact your business. The agent will also help in receiving annual state filing and other necessary correspondence on your behalf. There is a caveat; however, the registered agent has to be a resident of Indiana and must be an incorporated business in Indiana.

Entity type

There are two entity types in this discourse, the domestic and foreign. The domestic entity relates to an LLC formed in Indiana, while the foreign refers to an expansion of an LLC into Indiana. For Domestic LLC, you will be required to submit an Article of Organization while the foreign LLC will submit a Certificate of Authority.

Fee

The fees for both the domestic and the Foreign LLC differ. If you have a domestic LLC, you must pay $95 for an online application, while $100 goes for an Adobe PDF application. On the other hand, the Foreign LLC costs $105 for an online application and an extra $20 for an Adobe PDF application.

Operating agreement

This is not required by the state but is essential for the smooth running of internal affairs in the business.

EIN

This stands for Employer Identification Number and is issued so that tax information can be appropriately reported to the Internal Revenue Service. You may not be able to carry out some financial transactions except the issuance of an EIN. You can either apply online or by mail (Form SS-4).

Now that we have understood the essence of an operating agreement and how to create one, it is important to see how an actual agreement looks like. You can check the template here which is freely downloadable and easy to use.