What is an LLC operating agreement?

An operating agreement establishes a business’s financial and managerial responsibilities, including rules, regulations, and other administrative provisions. In Pennsylvania, the operating agreement serves the same function that bylaws serve for a corporation. These agreements will typically cover critical subjects such as ownership, management and voting, capital contributions, membership, distributions, and dissolution. At the very least, an operating agreement provides proof of ownership, which many banks require to open a business bank account. An operating agreement is an entirely private document between the owners and is not filed with the Pennsylvania Department of State nor with any other government agency.