New Jersey Single-Member LLC Operating Agreement
Create a New Jersey single-member LLC operating agreement with state-specific guidance on RULLCA defaults, taxes, and liability protection.
Introduction
A single-member LLC operating agreement is the internal document where you, as the sole owner of a New Jersey LLC, set the rules for how your business runs, how distributions are handled, and what happens if you bring on a partner or close the business later. New Jersey does not require the agreement to be in writing, oral or implied agreements are legally valid, but state law still lets you shape most default rules yourself, including the equal-split distribution rule that otherwise applies automatically. Putting your terms in writing is the clearest evidence, if a court or the IRS ever asks, that you are running a real business and not just using the LLC as a personal wallet.
Key Things to Know
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Written form is not required for a New Jersey operating agreement. N.J.S.A. 42:2C-2 defines it as an agreement that may be oral, in a record, implied, or any combination, and expressly covers a sole member's agreement.
- 2
Without an operating agreement, New Jersey law splits distributions EQUALLY among members, not in proportion to capital contributions (N.J.S.A. 42:2C-34(a)). This is the opposite of states that default to a contribution-based split.
- 3
A charging order is a judgment creditor's sole remedy against a member's LLC interest, and New Jersey law bars a court from ordering a foreclosure sale of the interest or letting a creditor interfere with management (N.J.S.A. 42:2C-43).
- 4
New Jersey has no flat annual franchise tax like California's $800 minimum. A single-member LLC's profit flows to the owner's personal NJ-1040 return; the only recurring state filing is a $75 Annual Report, due every year with the Division of Revenue and Enterprise Services.
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The duty of loyalty and duty of care can be restricted or altered if the change is not manifestly unreasonable, and the good-faith-and-fair-dealing covenant can never be eliminated (N.J.S.A. 42:2C-11(d)). New Jersey does not require these changes to be in writing specifically.
- 6
The operating agreement itself is not filed with the state. You form the LLC by filing a Certificate of Formation ($100 fee) with the Division of Revenue and Enterprise Services.
- 7
New Jersey does not require an LLC operating agreement to be notarized or witnessed to be valid.
Key decisions before you file
Before you file a LLC Operating Agreement in New Jersey, a few decisions shape the document: which option to choose and what each one means. The LLC Operating Agreement guide walks through them.
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New Jersey Requirements for LLC Operating Agreement
The Operating Agreement governs relations among the Members and between the Members and the LLC, the rights and duties of a Manager, and the conduct of the Company's activities, and controls over the Act's own default rules to the extent it addresses a matter (N.J.S.A. 42:2C-11(a)-(b)). It may not, however, vary the LLC's capacity to sue and be sued in its own name, vary the choice of New Jersey law, vary a court's power to order the signing and filing of records, or, except as permitted by a modification that is not manifestly unreasonable, eliminate the duty of loyalty, the duty of care, or the good-faith-and-fair-dealing covenant (N.J.S.A. 42:2C-11(c)).
A New Jersey LLC is member-managed by default unless the Operating Agreement expressly states the company is manager-managed (N.J.S.A. 42:2C-37(a)). In a member-managed LLC, each member has equal management rights; an ordinary-course matter may be decided by a majority of the members; but an act outside the ordinary course, and any amendment of the Operating Agreement, requires the consent of all members (N.J.S.A. 42:2C-37(b)).
A member's contribution to a New Jersey LLC may consist of tangible or intangible property or any other benefit, including money, services performed, or a promissory note or other agreement to contribute later (N.J.S.A. 42:2C-32). The obligation to make a promised contribution is not excused by the member's death or disability, and an unmet contribution obligation may be enforced by a creditor who extended credit in reliance on it (N.J.S.A. 42:2C-33).
Unless the Operating Agreement provides otherwise, any distributions made by a New Jersey LLC before its dissolution are shared EQUALLY among Members, not in proportion to each Member's capital contribution (N.J.S.A. 42:2C-34(a)). A Member's dissociation does not by itself entitle that Member to a distribution (N.J.S.A. 42:2C-34(b)). The Operating Agreement can set a different split.
In a member-managed New Jersey LLC, a matter in the ordinary course of the Company's activities may be decided by a majority of the Members; an act outside the ordinary course, including approval of a merger, conversion, or domestication, requires the consent of all Members (N.J.S.A. 42:2C-37(b)(3)-(4)). New Jersey's LLC Act does not impose a separate statutory quorum requirement; voting is governed by these consent thresholds directly.
Members of a member-managed New Jersey LLC, and managers of a manager-managed LLC, owe duties of loyalty and care (N.J.S.A. 42:2C-39). If not manifestly unreasonable, the Operating Agreement may restrict or eliminate specific components of the duty of loyalty and may alter the duty of care, though never to authorize intentional misconduct or a knowing violation of law; the good-faith-and-fair-dealing covenant can never be eliminated (N.J.S.A. 42:2C-11(d)).
A transfer of a New Jersey LLC member's transferable interest does not by itself cause dissociation or entitle the transferee to participate in management or access company records; the transferee's rights are limited to receiving the distributions the transferor would have received, unless the Operating Agreement's admission conditions are satisfied (N.J.S.A. 42:2C-42).
The Operating Agreement should specify the circumstances under which a Member may withdraw or be dissociated; N.J.S.A. 42:2C-46 lists the statutory dissociation events that apply by default. By default, dissociation does not by itself entitle the Member to any distribution (N.J.S.A. 42:2C-34(b)), and the dissociated Member's rights convert to those of a transferee (N.J.S.A. 42:2C-47(a)(3)) -- the Operating Agreement can set different buyout or valuation terms if the Members want them.
The agreement must establish the circumstances under which the LLC may be dissolved and the procedures for winding up its affairs, including the appointment of persons to wind up the LLC's activities.
New Jersey's LLC Act does not set a separate list of records an LLC must keep. Instead, it gives Members, Managers, and dissociated Members statutory rights to inspect company records and receive information material to their rights and duties, on the terms in N.J.S.A. 42:2C-40. The Operating Agreement may restrict these information rights, but not unreasonably (N.J.S.A. 42:2C-11(c)(6)).
A New Jersey LLC may indemnify a Member or Manager, and the Operating Agreement may alter or eliminate that indemnification and may eliminate a Member's or Manager's personal liability to the Company for money damages (N.J.S.A. 42:2C-38, N.J.S.A. 42:2C-11(g)). That elimination can never cover a breach of the duty of loyalty, an improper financial benefit, an improper distribution, intentional infliction of harm on the Company or a Member, or an intentional violation of criminal law (N.J.S.A. 42:2C-11(g)).
Unless the Operating Agreement provides otherwise, amending a New Jersey LLC's Operating Agreement requires the consent of all Members in a member-managed LLC (N.J.S.A. 42:2C-37(b)(5)), and the same unanimous-consent default applies in a manager-managed LLC (N.J.S.A. 42:2C-37(c)(4)(d)). This is a default rule, not merely a possibility -- the Operating Agreement can lower the threshold if the Members agree to do so.
Frequently Asked Questions
It's the internal document where a New Jersey LLC's sole owner sets the rules for running the business and handling distributions. New Jersey doesn't require it to be written, oral or implied agreements are valid, but writing it down is the clearest proof the LLC is a real business, not just a personal wallet.
Not by blanket legal requirement. New Jersey's operating agreement definition expressly covers oral or implied agreements, including a sole member's. But without a written one, state default rules fill every gap automatically, including an equal-split distribution rule and fiduciary-duty terms you never chose yourself.
New Jersey's default rules fill the gap. Any distributions made before dissolution are split equally among members rather than however you'd choose to allocate them, which matters most once you bring on a second member and haven't defined your own split (N.J.S.A. 42:2C-34(a)).
It supports that protection. New Jersey law makes a charging order the sole remedy for a member's personal creditors, and bars a court from ordering a foreclosure sale of the interest or letting the creditor interfere with management (N.J.S.A. 42:2C-43). Keeping business and personal finances separate still matters.
New Jersey has no flat annual franchise tax. A single-member LLC's profit flows to the owner's personal NJ-1040 return instead of a separate business filing. The recurring state cost is a $75 Annual Report, filed every year with the Division of Revenue and Enterprise Services.
No. You file a Certificate of Formation ($100 fee) with the Division of Revenue and Enterprise Services 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.
Broadly yes, if the change is not manifestly unreasonable. New Jersey lets an operating agreement restrict the duty of loyalty and alter the duty of care, though never to authorize intentional misconduct or a knowing violation of law. The good-faith-and-fair-dealing covenant can never be eliminated (N.J.S.A. 42:2C-11(d)).