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Illinois Single-Member LLC Operating Agreement

Create an Illinois single-member LLC operating agreement with state-specific guidance on RULLCA defaults, member liability, and Secretary of State filings.

Introduction

A single-member LLC operating agreement is the internal document where you, as the sole owner of an Illinois LLC, set the rules for how your business runs, how distributions are handled, and what happens if you add a member or close the business later. Illinois does not require an operating agreement to be in writing; it can be oral, implied, or in a written record. A written agreement is still the clearest evidence that your LLC is a genuine, separate business rather than your personal alter ego, which matters because Illinois law allows creditors to reach a member's personal assets through equitable remedies like veil piercing when that line is blurred.

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Key Things to Know

  1. 1

    Illinois does not require an operating agreement to be in writing. It can be oral, implied, or in a written record, though only a written agreement clearly documents the terms you actually agreed to (805 ILCS 180/1-5, 805 ILCS 180/15-5).

  2. 2

    Without an operating agreement addressing it, Illinois law requires that any distribution made before dissolution be paid in equal shares to each member, not in proportion to each member's capital contribution (805 ILCS 180/25-1).

  3. 3

    An Illinois LLC is member-managed by default unless the operating agreement itself states it is manager-managed. Since a 2017 revision to the LLC Act, this election is made in the operating agreement, not the Articles of Organization (805 ILCS 180/15-1).

  4. 4

    A charging order is a judgment creditor's exclusive remedy for reaching a member's distributional interest, but it is not the only tool available. Illinois law expressly preserves common-law remedies like veil piercing, confirmed by a 2025 amendment to the LLC Act (805 ILCS 180/10-10, 805 ILCS 180/30-20).

  5. 5

    A single-member LLC taxed as a disregarded entity, the default federal and Illinois tax treatment, does not owe Illinois's 1.5% Personal Property Replacement Tax. That tax applies to LLCs taxed as partnerships or that elect corporate treatment.

  6. 6

    The duty of loyalty and duty of care can be narrowed by the operating agreement only with clear and unambiguous language, and can never be stretched to authorize intentional misconduct or a knowing violation of law (805 ILCS 180/15-3, 805 ILCS 180/15-5).

  7. 7

    The operating agreement itself is not filed with the state. You form the LLC by filing Articles of Organization (Form LLC-5.5, $150 fee) with the Illinois Secretary of State, then file a $75 annual report each year to stay in good standing.

Key decisions before you file

Before you file a LLC Operating Agreement in Illinois, a few decisions shape the document: which option to choose and what each one means. The LLC Operating Agreement guide walks through them.

Open the LLC Operating Agreement guide

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Illinois-Specific Provisions

Use this together with the complete LLC operating agreement template, which covers the standard provisions your agreement also needs: capital contributions, management structure, meetings, transfers, withdrawal, and dissolution. The sections below cover only what is specific to Illinois law.

1. Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois, including the Illinois Limited Liability Company Act, 805 ILCS 180/1-1 et seq.

2. Distributions

As the sole Member, the Member is entitled to all distributions made by the Company. If the Company later admits additional Members, unless otherwise stated elsewhere in this Agreement, any distribution made before dissolution shall be paid in equal shares to each Member, regardless of the value of each Member's capital contribution, as provided by 805 ILCS 180/25-1 in the absence of a contrary agreement.

3. Fiduciary Duties

The Member owes the Company the duties of loyalty and care described in 805 ILCS 180/15-3, including accounting for and holding as trustee any property, profit, or benefit derived from Company business, and refraining from grossly negligent, reckless, or intentional misconduct. This Agreement may narrow, but not eliminate, these duties, and only where the modification is set forth in clear and unambiguous language. No modification under this Section may authorize intentional misconduct or a knowing violation of law, as provided by 805 ILCS 180/15-5.

4. Member Liability

Except as stated in this Section, the Member is not personally liable for the debts, obligations, or liabilities of the Company solely by reason of being a Member, as provided by 805 ILCS 180/10-10(a). This limitation does not eliminate liability the Member may have under law other than the Illinois Limited Liability Company Act, including for the Member's own wrongful acts, or under court-imposed equitable remedies such as piercing the limited liability company veil, as provided by 805 ILCS 180/10-10(a-5). The Member may accept personal liability for a specified Company debt only by a separate written consent referencing this provision, as provided by 805 ILCS 180/10-10(d).

5. Execution

This Agreement is effective as of the date signed below. Illinois law does not require an LLC operating agreement to be notarized or witnessed to be valid. The provisions above are effective only because they are set forth in this written, signed Agreement.

[MEMBER] Signature: _____________________ Date: _____________

Printed Name: _____________________

Illinois Requirements for LLC Operating Agreement

Member-Managed vs. Manager-Managed Structure (805 ILCS 180/15-1)

The Operating Agreement must clearly specify whether the LLC is member-managed or manager-managed. Since Illinois's 2017 revision of the LLC Act, this designation is made in the Operating Agreement itself, not the Articles of Organization: an LLC is member-managed by default unless the Operating Agreement states it is manager-managed (805 ILCS 180/15-1).

Fiduciary Duties (805 ILCS 180/15-3)

Members in a member-managed LLC owe duties of loyalty (accounting for company property or profit, dealing fairly with the company, and not competing with it before dissolution) and care (avoiding grossly negligent, reckless, or intentional misconduct). The Operating Agreement may narrow these duties only with clear and unambiguous language, and may never authorize intentional misconduct or a knowing violation of law (805 ILCS 180/15-3, 805 ILCS 180/15-5).

Voting Rights and Requirements (805 ILCS 180/15-1, 805 ILCS 180/10-5)

In a member-managed LLC, ordinary-course decisions are made by a majority of members. Actions outside the ordinary course, including amending the Operating Agreement, admitting a new member, or dissolving the company, require the consent of all members (805 ILCS 180/15-1).

Allocation of Profits, Losses, and Distributions (805 ILCS 180/25-1)

Absent a contrary Operating Agreement provision, Illinois law requires that any distribution made before dissolution be paid in equal shares to each member, regardless of each member's capital contribution. The Operating Agreement can set a different split (805 ILCS 180/25-1).

Records and Accounting (805 ILCS 180/1-40)

Illinois LLCs must maintain company records and give members a right to inspect them. The Operating Agreement may not unreasonably restrict a member's right to information or access to records (805 ILCS 180/1-40, 805 ILCS 180/15-5).

Indemnification and Liability Limitations (805 ILCS 180/15-5)

Members and managers are not personally liable for LLC debts solely by reason of their status, but this protection is not absolute. Illinois law preserves personal liability under equitable remedies such as veil piercing, confirmed by a 2025 amendment to the Act, and a member may accept personal liability in writing if the Articles of Organization so provide (805 ILCS 180/10-10).

Series LLC Provisions (805 ILCS 180/37-40)

Illinois is one of a limited number of states allowing a Series LLC. To get a liability shield between series, the Operating Agreement and Articles of Organization must establish each series with separate rights and duties, the LLC must keep separate records and assets for each series, and a certificate of designation for each series must be on file with the Secretary of State (805 ILCS 180/37-40).

Frequently Asked Questions

It's the internal document where an Illinois LLC's sole owner sets the rules for running the business and handling distributions. Illinois doesn't require it to be written, oral or implied agreements are valid, but a written agreement is the clearest proof the LLC is a real, separate business rather than the owner's personal alter ego.

Not by blanket legal requirement. Illinois allows oral or implied operating agreements (805 ILCS 180/1-5). But without a written one, state default rules apply automatically, including an equal-shares distribution default that matters once you add a member, and there is less written evidence that your LLC is a genuinely separate business.

Illinois's default LLC rules fill the gap. If you later admit another member, any distribution made before dissolution must be split in equal shares among members rather than based on who contributed more capital, unless your operating agreement states a different split (805 ILCS 180/25-1).

It supports that protection but doesn't guarantee it. A charging order is a creditor's exclusive remedy against your distributional interest, but Illinois law separately preserves equitable remedies like veil piercing for a member's own wrongful conduct, confirmed by a 2025 amendment to the LLC Act (805 ILCS 180/10-10).

Illinois LLCs must file a $75 annual report with the Secretary of State to stay in good standing; missing it by 60 or more days adds a $100 penalty. A single-member LLC taxed as a disregarded entity does not owe the state's 1.5% Personal Property Replacement Tax, unlike LLCs taxed as partnerships.

No. You file Articles of Organization (Form LLC-5.5, $150 fee) with the Illinois Secretary of State to form the LLC, but the operating agreement itself is an internal document. You keep it with your own business records; it's never submitted to the state.

Partially. The operating agreement may narrow, but not eliminate, the duties of loyalty and care, and only if the modification is clear and unambiguous. No modification can authorize intentional misconduct or a knowing violation of law (805 ILCS 180/15-3, 805 ILCS 180/15-5).