Although Arizona LLC law does not require that the members of an Arizona LLC sign an Operating Agreement, Arizona LLC attorney Richard Keyt highly recommends that all members of an Arizona LLC, including single member LLCs, sign a “good” Operating Agreement.

A good Operating Agreement is a document that is drafted specifically to comply with Arizona’s LLC law and that contains provisions and language needed by most LLCs and their members.  The fact the members of an LLC sign an Operating Agreement could actually be detrimental to the members if the Operating Agreement is poorly written or not written specifically to comply with Arizona LLC law.

There are two reasons a the sole member of an LLC should sign an Operating Agreement:

  • When courts are asked to pierce the company veil and hold the sole member liable for the debts of the LLC one of the factors that counts against the member is the lack of an Operating Agreement.  If you treat your business like a hobby you don’t have a signed Operating Agreement.  If you treat your business like a business you must have a signed Operating Agreement.
  • To set the rules that govern the operation of the company if the sole owner were to die and his or her interest is inherited by loved one.

A good Operating Agreement is a complex document that should cover a lot of important ground.  It should be drafted by an experienced LLC attorney licensed to practice in the LLC’s state of formation.  As a business lawyer who has practiced law in Arizona since 1980 I’ve prepared 8,560+ Operating Agreements and spent hundreds of hours researching and revising my Operating Agreement.  The Operating Agreements we prepare for the LLCs we form are great operating Agreements.