Missouri LLC Operating Agreement: Drafting Checklist

You’ll be filing several documents as part of the business formation process for a Missouri limited liability company (LLC). These documents include your Articles of Organization, used to tell the Secretary of State what your Missouri LLC does, and your LLC operating agreement.

An operating agreement is a document required by state law that defines the rules by which you’ll run your Missouri business. This article covers everything small business owners need to know about operating agreements in Missouri.

Key Takeaways

• Every Missouri LLC needs to have an LLC operating agreement per state law.

• Your LLC’s operating agreement solidifies the limited liability status of your company and the protections offered to its members.

• Your Missouri LLC operating agreement defines what happens if team members leave or if new members join.

What Is an LLC Operating Agreement?

While there are several aspects of LLC formation that almost every state requires you to complete, such as filing Articles of Organization and assigning a registered agent, not all states require you to create an operating agreement for your LLC.

An operating agreement is a legal document that you use to outline basic information and create rules under which you’ll govern your LLC. Think of it as a way to prove your LLC’s structure and management rules, ensuring no one will force you to abide by state laws alone if a dispute arises.

All founding members need to agree on the terms set out in the agreement. You can also use the agreement to officially note essential details such as your registered agent information and employer identification number (EIN).

State Requirements

Unlike many other states, Missouri law requires LLC owners to create an operating agreement to govern their Missouri business.[1] The state defines an operating agreement as an internal document, meaning you don’t have to file it with the Secretary of State for public record.

LLC Operating Agreement Benefits

Given that you have to create an operating agreement to form your LLC business entity in Missouri, it’s helpful to know that there are good reasons to have this legal document in place. The following are three of the key benefits of creating an agreement.

Improve Liability Protection

Your LLC already provides strong liability protection, meaning that most business issues won’t cause problems in your personal life. With an operating agreement, you solidify the liability protection your Missouri LLC offers you as an owner by defining your specific role (and the roles of other members) inside the business.

Protect Your Company for the Future

State law changes constantly. If you don’t have an LLC operating agreement, your business is subject to ever-evolving laws, forcing you to seek legal advice to ensure you operate as the state intends. An operating agreement doesn’t make you immune from these changes in law, but it does allow you to create business-specific rules that won’t change regardless of state law.

Outline Your Decision-Making Process

The larger an LLC becomes, the more critical it is to create rules that determine how the business makes decisions. Who controls the company’s business bank account? What happens if a member leaves or raises a dispute? What voting power does each member have? The answers to these types of questions make up the clauses you insert into your operating agreement.

Collectively, those clauses govern how you make decisions. Given that an operating agreement is a legal document, they also ensure that members can’t argue against following the clauses within.

Who Needs an Operating Agreement?

As mentioned, Missouri state law says that every LLC that operates within the state must have an operating agreement. Though you don’t need to file this agreement with the Secretary of State,[1] the lack of an agreement could close your business.

Note that this law doesn’t apply to all business entity types in the state. Business owners forming a sole proprietorship or corporation don’t have to worry about creating an operating agreement. It’s only for LLC formations or S-Corp formation cases where the basis of the S-Corp is an LLC.

Drafting Your Missouri LLC Operating Agreement

Now that it’s clear that you need a written operating agreement to satisfy the Secretary of State’s requirements in Missouri, it’s time to move on to the vital business of drafting the agreement.

Note that an operating agreement is a legal document, making it essential to abide by state law when drafting. For this reason, many business owners use an LLC operating agreement template or a document creation service. If you wish to prepare the document yourself, these are the five steps to follow.

Step 1: Provide Business Information

You can draw the following basic information from your Articles of Organization for this step, as you must complete that form to create your LLC in the first place.

• Your Missouri business name and place of business

• Details about the registered agent you’ve selected for your business

• Information about what the business does, such as its industry 

• A statement of intent that says the LLC operates under Missouri state law

If you consider the document part of the LLC formation process, you can start creating it as soon as you settle on an appropriate LLC name. From there, you can add to your operating agreement as you move through the formation process, ensuring the document is ready to go when you start conducting business in Missouri.

Step 2: List LLC Members

Whether you have a single-member LLC or a multi-member LLC, you must create a list of all business owners and members to satisfy a crucial aspect of the operating agreement— defining roles and responsibilities.

Each member listed in the agreement must have the following information outlined:

• Name

• Address

• Title

• Ownership interest or membership interest

The latter item is essential because you’ll use it to decide ownership percentages and define member contributions. Also note that having this list confirms each member as part of your LLC, ensuring they benefit from the personal liability protection offered to their personal assets as part of the LLC structure. That’s why you need this list even if you have a single-member LLC.

The list of members is handy for startup owners to track each member’s ownership. Ownership stakes between members of an LLC may be somewhat fluid during the early periods, with members’ ownership percentages changing based on their investments. The list serves as a helpful reference point.

Step 3: Decide Member-Managed vs Manager-Managed

Defining your management structure is the next step, with your operating agreement being used to determine the day-to-day management of your LLC. You have two options when forming an LLC in Missouri:

• Member-managed

• Manager-managed

Each LLC member has the authority to partake in LLC management in a member-managed LLC. However, the level of the management role each member assumes can vary, with your operating agreement being used to place conditions or restrictions on each member as needed.[2]

If you opt for a manager, every member must agree to divest the company’s management authority to an elected individual or group. This manager can be one of the LLC’s members, though this isn’t a requirement[2]. However, all members of the LLC must agree to the elected manager or management team as part of the operating agreement.

Step 4: Lay Out Administrative Operations

With your membership list in place and management structure solidified, you define the administrative operations within your LLC. Think of this as the process you follow to determine who handles various situations if they arise.

Aspects to cover here include:

• The voting rights of each LLC member

  • These rights are often based on the member’s capital contributions, though some members may receive higher voting rights based on their expertise or work.

• The company’s financial terms, which include detailing the distribution of profits and losses within the LLC

• How you’ll run your meetings, with provisions in place to define who takes notes and minutes and which members are involved in various types of meetings

• Information about your preferred tax treatment, which may include assignments to members for handling your income tax return for the Internal Revenue Service (IRS)

• The methods and oversight for crucial functions, such as your business bank account, management of a business license, or any other specific needs that require somebody to be accountable

In states where you must file an annual report, you may use this step to define which member is responsible for that report. However, LLC owners in Missouri don’t need to worry about this.

Step 5: Add and Remove LLC Members

One of the main reasons to have an operating agreement is to future-proof your LLC. Part of this future-proofing process involves using this internal document to define what happens if members leave the LLC or new members join later. Again, this is required even if you have a single-member LLC because you may add new members as the company grows.

In the case of departing members, you need to outline what happens to their membership interest and ownership percentages once they leave. Your operating agreement determines how you divvy up the departed member’s roles, responsibilities, and ownership stake.

For new members, consider outlining a voting process that determines whether a member can join and conditions to determine what their stake will be based on.

Finally, it’s worth outlining specific instructions and duties to prepare for the dissolution of the company, which may occur if certain members leave or if your LLC is subject to a buyout.

Create Your Operating Agreement Through a Filing Service

When you start an LLC in Missouri, going through all the formation steps might be confusing.

Swyft Filings helps small business owners and their Missouri LLCs with every aspect of creating an LLC, including drafting an LLC operating agreement and ensuring you pay the appropriate filing fees for the process. Our service starts at $0 (plus state fees), and we’ve helped over 300,000 businesses with the formation process since 2015.

If you need a personalized service designed to ensure you file every document the Missouri Secretary of State needs to ratify the existence of your LLC, Swyft Filings is here to help. 

FAQs

Is an LLC Operating Agreement required in Missouri?

Yes, Missouri state law requires all LLCs transacting in the state to file an operating agreement.

How does an LLC Operating Agreement help protect my assets?

An operating agreement helps you to protect your assets by officially designating you as an LLC owner or member, thus confirming that you’re afforded the protections an LLC offers.

Who needs access to this document once it’s drafted?

Beyond your LLC members and owners, financial professionals, legal professionals, and investors may request access to your operating agreement if you run into tax or similar issues.

How do I edit information on this document if membership changes?

You can only edit information on an operating agreement if all members mutually consent. Typically, an LLC owner will submit a proposal to make an edit to the members defined in the agreement, who’ll vote on whether the amendment should take place.

What other legal documents do I need to draft for my Missouri LLC?

You must submit Articles of Organization to the Missouri Secretary of State office, which you can do online.[3]

Bibliography

1. Missouri Secretary of State. “Missouri Small Business Startup Guide.” Accessed June 6, 2023.

2. Missouri Secretary of State. “Frequently Asked Questions.” Accessed June 6, 2023.

Missouri Secretary of State. “Registering a Domestic Limited Liability Company.” Accessed June 6, 2023.