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What is an Idaho LLC Operating Agreement?

An LLC Operating Agreement is a printed piece of document among the owners or LLC members that includes information and details about LLC management and ownership.

Basic Information:

The Operating Agreement will contain standard information about your LLC in Idaho. Most of the information will consist of the same details already listed in your LLC’s Certificate of Organization, like:

LLC Name

Duration of LLC

Purpose of LLC

Idaho Registered date

LLC effective date

And how the LLC is going to be taxed


LLC Operating Agreement Idaho

LLC Ownership:

Generally, your LLC Operating Agreement is a contract where all the members list down the stake of the LLC they own, from where every Member will make their signature in the Operating Agreement.

The stake somebody owns is referred to as their ‘ownership units’, ‘ownership percentage’, or ownership interest. LLC ownership is usually defined as a percentage (e.g, 25%, 55%, 75%, etc,) The terms ‘shareholders’ or ‘shares’ isn’t applicable to LLCs.

Initial Capital Contribution:

After the Idaho Secretary of State approves your LLC filing, the first thing you should do is have every LLC Member (or single Member in a Sole LLC) deposit their preliminary capital contribution. The first capital contributions made will be recorded in your Idaho LLC Operating Agreement.

A capital contribution is basically a member depositing cash into the LLC bank. The most frequent method of doing this is by having every member write a check made out to the LLC. This generates a good record of transactions made. If you want to use an Operating Agreement template like the one provided below, the initial capital contribution should be equivalent to the ownership percentages.

For instance, if it’s an LLC with 2 Members each with a 50/50 stake, every individual should deposit an equal amount of money. As long as each member contributes the same amount, it doesn’t matter if they both deposit $10,000 or $30,000. If the 2-Member LLC’s ownership is 60/40, the deposits should be a representation of that ratio, such that Member 1 deposits $6,000 and Member 2 deposits $4,000.

Distribution of Profits:

With regard to Operating Agreement templates provided, when Members withdraw money from their Idaho LLC bank account and share the profits, this is known as a ‘capital distribution’.

A capital distribution is done when an LLC Member writes a check from the bank account which is directed to the LLC Member(s) individually. It’s prudent to use a bank wire, digital bank transfer, or any other money transfer means that leaves a documented record.

When it comes to an Idaho Multi-Member LLC, the capital distributions amount is directly proportional to the LLC ownership percentage. So every Member will get the share profits according to the capital contribution they made.

Please Note: A capital contribution isn’t classified as a salary.

Statement about taxes

The Idaho LLC Operating Agreement will also contain a short statement highlighting how the LLC is going to be taxed.

Membership Voting:

The Idaho LLC Operating Agreement will stipulate the guidelines of membership voting. If you decide on going with a Member-Managed LLC template, the voting powers should be equivalent to the ownership percentages every member owns. Therefore, if an Operating Agreement stipulates a ‘majority vote’, the Member(s) with 50%+ are the so-called ‘majority’ and will have the power to vote on decisions.

If you’re in a Single-Member LLC, there’s to fuss about because you’re the majority vote and the unanimous vote.

In the case of a Manager-Managed Operating Agreement, the voting powers are allocated according to the LLC ownership percentages of the members in question. By using a majority vote, the Members will elect a Manager for the LLC. The appointed Manager has a mandate to make decisions on behalf of the LLC without needing a vote from the Members. But certain things such as including a new LLC Member needs a vote from the existing Members (the Manager doesn’t get a say here).

What about Single-Member LLCs?

Operating Agreements aren’t meant for Multi-Member LLCs alone.

Even if you’re in a Single-Member LLC, it would be best to draft an Operating Agreement.

If you’re taken to court, having an Operating Agreement will aid in proving that your Single-Member is being operated and run autonomously. So your assets will remain safe and unreachable by creditors.

Am I Required to forward my Idaho LLC Operating Agreement to the state?

You aren’t required to send your Idaho LLC Operating Agreement to any government agency or Secretary of State.

An Idaho LLC Operating Agreement is an ‘internal document’ that you and your Members can keep in your company records.

Who needs your Operating Agreement?

Parties that may need a copy of your Idaho LLC Operating Agreement include:

Title companies

Banks and lending institutions


Lawyers, tax professionals, and accountants

Court (if you’re ever summoned)

This list isn’t comprehensive. Other companies and persons may request to see your Idaho LLC’s Operating Agreement copy.

It’s important to note that Operating Agreements don’t have to get notarized

You don’t need to notarize your Idaho LLC Operating Agreement

When you and other Members in the LLC put your signature in the Operating Agreement, it becomes legally binding.

Idaho LLC Operating Agreement (Member-managed)

This type of Idaho LLC is where all the LLC Members or owners can bind the LLC in agreements and contracts. Here the LLC Member(s) have the power of running the company and conduct day-to-day operations.

Many individuals opt to have their Idaho LLC on a Member-managed basis.

Idaho LLC Operating Agreement (Manager-managed)

This type of Idaho LLC is where only a single, or a few designated persons (‘Managers’) have the authority of binding the LLC in agreements and contracts. The Idaho LLC Managers run the day-to-day business operations, while the other LLC Members don’t have the power to bind the LLC in agreements and contracts, and they aren’t involved in running daily business operations. Rather, they take a more investor/passive role. However, the Members have the power of voting in the Manager into their place and also plays a hand in voting on particular items such as removing or adding an LLC member.

Tailored Idaho LLC Operating Agreement

You should consider enlisting the services of a trusted service provider or business lawyer if you’re looking to have your Idaho LLC’s Operating Agreement tailored to your LLC Members’ specifications.

Ensure that all LLC Members have got a copy

When you complete drafting your Idaho LLC’s Operating Agreement, ensure that all the Members retain a copy.

And have a couple of the Operating Agreement copies in your business records.

Additional Resources