New Hampshire LLC Operating Agreement: Drafting Checklist

To register a limited liability company in New Hampshire, business owners must file their Certificate of Formation with the Secretary of State and pay a filing fee.[1] Once complete, your LLC will be official and ready for business.

However, you’ll still need one essential document to help run your business effectively. After registering, business owners should draft a New Hampshire LLC operating agreement. This document outlines a specific business plan and lets you customize company policies according to your needs.

You’ll benefit from making an operating agreement early in the business formation process, preferably before or while registering your LLC with the New Hampshire Secretary of State.

Key Takeaways

• While not required by New Hampshire law, an operating agreement can benefit your business in many ways when you start an LLC. This includes outlining a business strategy, protecting you from personal liability, and keeping your business from falling under default state laws.

• You can make the process easier by using operating agreement templates or hiring a professional filing service to draft this internal document.

• To make a comprehensive operating agreement, you’ll need in-depth information on your business and a detailed outline of daily operations agreed upon by members.

What Is an LLC Operating Agreement?

An LLC Operating Agreement is an internal document that clearly defines a business plan for your company. This includes provisions, regulations, management structure, and administrative operations. It allows you to fully customize your business processes with the agreement of members included.

After members sign the document, it becomes legally binding. That’s why discussing and verbally agreeing on policies is crucial before finalizing them. Business owners will also benefit from hiring professional legal advice for this process. This will streamline the drafting and help avoid pitfalls, complications, or discrepancies.

State Requirements

Technically, operating agreements aren’t mandatory by state law, as your businesses can exist without them. However, not having one means that your internal business policies must follow New Hampshire default state law.[2] Drafting one is highly encouraged to avoid procedures that may not consider your business specifics.

Seeking legal advice when drafting an operating agreement is also recommended to ensure that all relevant topics are covered. You’ll need some information necessary for your registration, such as your LLC name, LLC members’ names, business purpose, and registered agent.

LLC Operating Agreement Benefits

While the LLC operating agreement is not legally required for any business in New Hampshire, having one can still bring you many benefits. Some of the most apparent include:

• Substantial legal protection. An operating agreement first defines your business as a distinct legal entity. This means you’ll be protected from personal liability. No one will hold you personally accountable if your business suffers losses or falls into debt.

• Customized business policies. LLCs without an operating agreement will automatically fall under state law. This takes control away from the decision-making process for all members.

• Comprehensive business plan. Business management can be a complex process. All members should be on the same page. You can avoid confusion between members during daily operations by outlining a defined strategy.

Who Needs an Operating Agreement?

With the benefits in mind, owners might wonder what type of business entities need an operating agreement. Some formations include:

• Any New Hampshire LLC. While not mandatory by state law, any LLC can benefit from an operating agreement. This includes small businesses, larger companies, single-member LLCs, and multi-member LLCs. Both foreign LLCs and domestic LLCs should also create this document.

• LLCs in California, New York, and Missouri. If your LLC is in one of these three states, you must have an operating agreement by state law.

The businesses that don’t necessarily need operating agreements include:

• Incorporations. Although incorporations need customizable regulations, they typically don’t have operating agreements but, instead, bylaws. These regulations outline business affairs much in the same way operating agreements do for LLCs.

• Sole proprietorships. These are businesses that only consist of one person. The owner and the company are considered to be the same entity. Sole proprietorships will typically create other documents for their business strategies.

Drafting Your New Hampshire LLC Operating Agreement

Once you’ve decided to draft a New Hampshire operating agreement, you can begin by collecting the relevant information for your business. Afterward, you’ll need to clearly define members, management structure, and strategies for daily business operations.

Consider hiring a legal professional, as they’ll ensure the document is drafted and doesn’t skip any relevant points. However, there are some things you can do to prepare for the document. They include:

• Registering your LLC with the New Hampshire Secretary of State. Your LLC will be ready to conduct business by filing your Certificate of Formation.

• Using an LLC operating agreement template. A template will streamline the process for you as it categorizes all relevant information for the LLC.

• Collecting basic LLC information. Operation agreements are relatively comprehensive documents. Be sure to have critical points such as your business name, LLC owners, ownership structure, etc.

Step 1: Provide Business Information

Whether working with professional legal advisors or yourself, providing the necessary business information will be the first step. The information points you need include:

• Service of process

• The principal place of business

• Registered office

• Principal office

• Your Employer Identification Number (EIN)

• The company name

• The place of business

Mostly, you’ll find this information on your filing documents for the Secretary of State or any document confirming your LLC formation. However, business owners must contact the Internal Revenue Service (IRS) for their Employer Identification Number.[3]

Step 2: List LLC Members

Your New Hampshire business wouldn’t be complete without your members. That’s why it’s essential to list them on your operating agreement. Business owners should assign responsibilities to each corresponding member and their roles throughout daily operations. It would be best to reach a verbal agreement before finalizing this aspect in written form.

Member roles are also connected to various administrative operations crucial for decision-making, such as voting rights, membership interests, and ownership percentages.

Listing all relevant parties is essential for any operating agreement because it protects them from personal liability. If your LLC acquires debt, it won’t be held personally responsible. You’ll also want to use this segment to specify whether you’re a single or multi-member LLC.

Step 3: Decide Member-managed vs. Manager-managed

The management structure is a deciding factor of your LLC because it defines how important decisions within the business will be made. You’ll want to select the relevant management structure for your members. The choices include:

• A Member-managed LLC. This management structure brings members into actively making daily operations decisions. With this structure, each member can vote through their rights as an official agent for the LLC.

• A Manager-managed LLC. Sometimes, members won’t be close enough to their businesses to make daily operations decisions. Instead, they appoint a team of managers to fulfill this role. This particular structure is standard with larger firms.

If you’re a single-member LLC, then you’re considered member-managed. However, you can also hire managers if necessary.

Step 4: Layout Administrative Operations

Although technical, the administrative operations of your LLC are a crucial aspect of conducting business. Before outlining this section, you’ll want other members to agree on your plans verbally. Afterward, you can draft this part with legal help.

Administrative operations are strategies for daily tasks and affairs of the business. Outlining this part with a clear business plan will help standardize business processes and help you deal with the daily challenges of running your New Hampshire limited liability company. Some of the specific cases are:

• A business bank account. You can plan finances accordingly with a specific bank account for resources. Companies also need this for tax purposes and annual reports for the IRS.

• Voting rights. When making important decisions, members will gather together and take votes. You’ll need to outline the specific voting rights of each member. Some choose to divide this equally, while others might adjust them according to capital contributions or ownership percentages.

• Allocations. Your business might both suffer losses and gain profits during an extended period. It’s best to reasonably define the distribution of these losses and gains between the members involved.

• Capital contributions. Frequently, members will give capital contributions to accelerate the development of the LLC. Specify these sums within the agreement and clearly state how this can affect other administrative operations.

Step 5: Add and Remove LLC Members

This section allows you to define what happens when you’re changing membership. This calls for amending your operating agreement, at the very least. Some business owners also choose to start their operating agreement from scratch.

This is because adding or removing members is a complex process that affects many if not all, administrative operations such as voting rights. Remember to make these new policies reflect the change in membership.

Create Your Operating Agreement Through a Filing Service

This crucial document can take lots of time and effort to draft correctly. Business owners must collect information and ensure they’re on the same page with the members.

That’s why our operating agreement services make the process so much easier. Create your LLC Operating Agreement online or even file your LLC with our service. It only takes minutes and ensures you have a compliant document for conducting business in the state of New Hampshire.

We take all the stress out of forming your LLC. As a business owner, you can focus on growing your business effectively without losing time on tedious documentation.

FAQs

Is an LLC Operating Agreement required in New Hampshire?

No, an LLC Operating Agreement is not required in New Hampshire by state law, but it is still highly recommended.

How does an LLC Operating Agreement help protect my assets?

A written operating agreement distinguishes you and your LLC as separate entities, giving you limited liability status. This protects you from personal assets if your business falls into debt.

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

Once you draft your operating agreement, keep it with your other internal documents. You and the members included should have a copy. Also, you might want to provide your New Hampshire registered agent with a copy, as they legally deal with documents on your company’s behalf.

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

If membership changes, you’ll need to amend your operating agreement at the very least. This might entail changes in other administrative operations like voting rights. Ensure this is reflected in the amendment and signed by all the members involved.

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

You must file the Certificate of Formation for your New Hampshire LLC with the Secretary of State. Likewise, you’ll need your Employer Identification Number, which you can get from the IRS.[3] Business owners will also need a valid business license.

Bibliography

1. New Hampshire Secretary of State. “State of New Hampshire CERTIFICATE OF FORMATION OF A NEW HAMPSHIRE LIMITED LIABILITY COMPANY.” Accessed June 30, 2023.

2. New Hampshire Statutes. “304-C: LIMITED LIABILITY COMPANIES.” Accessed June 30, 2023.

3. IRS. “Topic No. 755, Employer Identification Number (EIN) – How to Apply.” Accessed June 30, 2023.