Illinois LLC Operating Agreement
The Illinois LLC Operating Agreement is the core document that is referred to when issues
concerning an Illinois limited liability
company (“LLC”) need to be resolved.
The LLC
Operating Agreement is the most important document for your Illinois LLC.
In the case of a single member LLC, without the formality
of an LLC Operating Agreement, the LLC can closely resemble
a sole proprietorship, which does not limit your personal
liability for business debts of the LLC.
With respect to a multi-member LLC, the LLC Operating Agreement reflects the agreement among the members with
respect to the affairs and management of the LLC and governs
the relationship amongst the members of the LLC. By having
an LLC Operating Agreement, the members will be provided
with a clear set of rules that all members have agreed upon
greatly reducing the likelihood of disagreement between
them in the future. A LLC Operating Agreement will also
greatly reduce financial and management misunderstandings,
and make sure your business is governed by your own rules
-- not default rules created by the state of Illinois.
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The LLC operating
agreement does not have to be filed with any state agency.
All states, including the state of Illinois will enforce
valid operating agreements entered into among LLC members.
The operating agreement will only be enforced against the
persons who are parties to the agreement. Therefore, it
is extremely important that all members of an LLC sign the
operating agreement.
Your Illinois
Limited Liability Company
LLC Filing Office
Illinois
Secretary of State
Department of Business Services
Limited Liability Company Division
Room 359, Howlett Building
Springfield, IL 62756
Tel: 800-252-8980
Entity or Franchise Level Tax
Illinois imposes its personal property tax replacement
income tax on partnerships and LLCs taxable as partnerships. The tax is equal to 1.5 percent of the partnerships
net income for the taxable year.
Illinois does not impose its personal property tax
replacement tax on LLCs that are disregarded for federal
income tax purposes. Neither a partnership nor an LLC is subject
to Illinois franchise tax.
State LLC Act
The
Illinois LLC Act is contained in Chapter 805 of the Illinois
Statutes
Important Statutory Rules
LLC Management
An
LLC is managed by its members unless the Operating Agreement
states that the LLC is to be managed by one or more managers.
Admission of Members
Unless
the Operating Agreement states otherwise, new membership
must be issued with the written consent of all the members.
Amending the Operating Agreement
Except
as otherwise provided in the LLC’s Articles of Organization
or Operating Agreement, managers may, by a majority vote,
amend the Articles of Organization to remove the name of
an initial manager who is no longer a manager, remove the
name of the initial registered agent of the LLC, or change
the LLC name. Other amendments to the Operating Agreement
require the approval of all members.
Dissolution
Unless
otherwise provided in the Operating Agreement, the approval
of all members is required to approve distributions to members
prior to dissolution of the LLC, to sell all LLC assets,
or to voluntarily dissolve the LLC.
Transfers of Property
If
the LLC is member-managed, transfers of LLC property may
be transferred by a document signed a member on behalf of
the LLC; if managed-managed, any manager can execute such
a transfer document on behalf of the LLC.
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