Rhode Island Single-Member LLC Operating Agreement
Create a Rhode Island single-member LLC operating agreement with state-specific guidance on default allocation rules, the $400 annual charge, and single-member continuation.
Introduction
A single-member LLC operating agreement is the internal document where you, as the sole owner of a Rhode Island LLC, set the rules for how your business runs, how profits are handled, and what happens if you bring on a partner or close the business later. Rhode Island does not require the agreement to be in writing, oral operating agreements are legally recognized, but a written agreement is needed to change several specific default rules, and it is what keeps the LLC alive if you die or withdraw as sole member, since Rhode Island's default is that the LLC dissolves unless a successor agrees in writing within 90 days to continue it.
Key Things to Know
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Written form is not required for a Rhode Island operating agreement in general, oral and implied agreements are legally recognized (R.I. Gen. Laws Section 7-16-2), but several specific default rules, including management-rights modifications, can only be overridden by a WRITTEN operating agreement.
- 2
Without an operating agreement, Rhode Island law allocates profits and losses based on each member's capital value, the value of that member's contributions, not split evenly (R.I. Gen. Laws Section 7-16-26).
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Rhode Island's default voting rule is also based on capital value, not one-member-one-vote, so a multi-member LLC without its own voting clause votes in proportion to contributions (R.I. Gen. Laws Section 7-16-21).
- 4
If the LLC's sole member dies, withdraws, or otherwise leaves, Rhode Island's default rule is that the LLC dissolves unless a successor agrees in writing within 90 days to admit a new member and continue the business (R.I. Gen. Laws Section 7-16-39).
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A charging order under R.I. Gen. Laws Section 7-16-37 lets a court give a member's judgment creditor the economic rights of an assignee in that member's LLC interest; Rhode Island's statute does not label this an exclusive remedy the way some other states' laws do.
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Rhode Island LLCs owe a $400 annual charge to the Division of Taxation and a separate $50 Annual Report to the Secretary of State (due between February 1 and May 1 each year), regardless of income or activity level.
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The operating agreement itself is not filed with the state. You form the LLC by filing Articles of Organization ($150 fee) with the Rhode Island Secretary of State, and you keep the operating agreement, if written, at the LLC's principal office (R.I. Gen. Laws Section 7-16-22).
Key decisions before you file
Before you file a LLC Operating Agreement in Rhode Island, 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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Rhode Island Requirements for LLC Operating Agreement
Rhode Island's LLC Act does not contain one overarching "operating agreement governs" section; instead, the Operating Agreement's authority to displace the statutory default is built into dozens of individual provisions phrased "unless otherwise provided in the articles of organization or operating agreement," including the management-structure default (R.I. Gen. Laws Section 7-16-14) and the manager-rights provisions of R.I. Gen. Laws Section 7-16-15. Where this Agreement is silent, the Rhode Island Limited Liability Company Act's default rule controls.
The LLC is formed by filing Articles of Organization with the Rhode Island Secretary of State (filing fee $150), which must state, among other things, the LLC's name and resident agent, whether it will be taxed as a partnership, a corporation, or disregarded as an entity separate from its member, and whether it will be member-managed or manager-managed (R.I. Gen. Laws Section 7-16-6). The Articles of Organization are incorporated by reference into this Operating Agreement.
Unless the Articles of Organization or a written operating agreement provide for manager-managed structure, a Rhode Island LLC is member-managed by default (R.I. Gen. Laws Section 7-16-14). In a member-managed LLC, each member is deemed a manager for purposes of the Act and is subject to all the same duties and liabilities a manager would have, including the duties described in R.I. Gen. Laws Section 7-16-17.
A member or manager of the LLC is not liable for the obligations of the LLC solely by reason of being a member or manager (R.I. Gen. Laws Section 7-16-23). This statutory shield covers the LLC's own debts and obligations; it does not, as a matter of general Rhode Island law rather than this specific section, shield a member or manager from liability for that person's own individually committed wrongful acts.
Unless the Articles of Organization or Operating Agreement provide otherwise, R.I. Gen. Laws Section 7-16-21 makes voting proportional to each member's capital value (the value of that member's contributions), not one-member-one-vote. Matters including dissolution, a sale of substantially all assets, a merger, and amendment of the Articles of Organization or this Agreement require the affirmative vote of members holding a majority of the total capital value entitled to vote.
Unless the Articles of Organization or Operating Agreement provide otherwise, profits and losses of the LLC are allocated to each member in proportion to that member's capital value, meaning the value of the member's contributions to the LLC reduced by distributions received (R.I. Gen. Laws Section 7-16-26).
Unless the Articles of Organization or Operating Agreement provide otherwise, cash or other asset distributions are allocated to each member on the basis of that member's capital value (R.I. Gen. Laws Section 7-16-27). No distribution may be made if, after giving it effect, the LLC would be unable to pay its debts as they become due, or the LLC's total assets would be less than its total liabilities plus amounts needed to satisfy other members' superior dissolution preferences (R.I. Gen. Laws Section 7-16-31).
A member may assign their economic interest in the LLC; the assignment alone does not entitle the assignee to participate in management or become a member (R.I. Gen. Laws Section 7-16-35). Unless the Articles of Organization or a written operating agreement provide otherwise, an assignee may become a member only with the unanimous consent of the other members (R.I. Gen. Laws Section 7-16-36).
Unless the Operating Agreement provides otherwise in writing, a withdrawn member has no right to a distribution by reason of withdrawal. The withdrawn member instead retains only an assignee's right to future distributions on that member's interest during any continuation of the business and upon completion of winding up, reduced by any damages if the withdrawal itself violated the Operating Agreement (R.I. Gen. Laws Section 7-16-29).
The LLC dissolves upon an event specified in the Articles of Organization or Operating Agreement, member action under R.I. Gen. Laws Section 7-16-21(b)(1), judicial dissolution (R.I. Gen. Laws Section 7-16-40), or, if the Member is the LLC's last remaining member, upon that Member's death, withdrawal, expulsion, or bankruptcy, unless a successor in interest agrees in writing within 90 days to admit a member and continue the business (R.I. Gen. Laws Section 7-16-39). On winding up (R.I. Gen. Laws Section 7-16-45), assets are distributed first to creditors, then to members in satisfaction of distribution liabilities, then to members to return capital value and share any remainder (R.I. Gen. Laws Section 7-16-46).
The LLC shall keep at its principal office a current list of members and managers, a copy of the Articles of Organization and any amendments, a copy of any written operating agreement, records of members' and managers' proceedings, and copies of the LLC's tax returns and financial statements for the five most recent years, available for member inspection on reasonable request (R.I. Gen. Laws Section 7-16-22).
R.I. Gen. Laws Section 7-16-4 grants an LLC the power to indemnify and advance expenses to a member, manager, agent, or employee to the same extent a Rhode Island business corporation may indemnify its directors, officers, employees, or agents, and to purchase insurance on their behalf, subject to any standards or restrictions set forth in the Articles of Organization or Operating Agreement (R.I. Gen. Laws Section 7-16-4(11)).
A manager (or, in a member-managed LLC, a member acting as manager under R.I. Gen. Laws Section 7-16-14) owes the good-faith and reasonable-care duties described in R.I. Gen. Laws Section 7-16-17. The Articles of Organization or Operating Agreement may limit or eliminate personal liability for breach of those duties, except liability may never be limited for breach of the duty of loyalty, bad-faith or intentionally wrongful conduct, a wrongful distribution under R.I. Gen. Laws Section 7-16-32, or an improper personal benefit taken without informed consent (R.I. Gen. Laws Section 7-16-18).
Unless the Articles of Organization or Operating Agreement provide a different threshold, amending the Articles of Organization or this Operating Agreement requires the affirmative vote of members holding a majority of the total capital value entitled to vote (R.I. Gen. Laws Section 7-16-21(b)(5)).
Rhode Island's LLC Act uses the term "resident agent," not "registered agent." Every Rhode Island LLC must maintain a resident agent for service of process, who must be either an individual Rhode Island resident, or a corporation, limited partnership, or LLC (domestic or authorized to transact business in Rhode Island) (R.I. Gen. Laws Section 7-16-11).
Frequently Asked Questions
It's the internal document where a Rhode Island LLC's sole owner sets the rules for running the business and handling profits. Rhode Island doesn't require it to be written for every purpose, oral agreements are legally recognized, but it's still the clearest proof the LLC is a real business, not just a personal wallet.
Not by blanket legal requirement. Rhode Island's own definition of an operating agreement covers oral agreements (R.I. Gen. Laws Section 7-16-2). But several default rules, including how management rights are modified, only change if you put them in a written operating agreement, and without one, every other state default controls automatically.
Rhode Island's default LLC rules fill the gap. Profits and losses get allocated based on each member's capital value, the value of that member's contributions, rather than however you'd choose to split them, which matters most once you bring on a second member and haven't defined your own split (R.I. Gen. Laws Section 7-16-26).
By default, Rhode Island law dissolves the LLC when its last remaining member dies, withdraws, or otherwise leaves, unless a successor agrees in writing within 90 days to admit a new member and continue the business (R.I. Gen. Laws Section 7-16-39). An operating agreement addressing this directly avoids leaving your business's survival to that window.
It supports that protection but doesn't guarantee it alone. Rhode Island lets a court charge a judgment creditor against your LLC interest, limiting the creditor to an assignee's economic rights (R.I. Gen. Laws Section 7-16-37), but unlike some states, Rhode Island's statute doesn't call this an exclusive remedy, so keeping finances separate still matters.
Rhode Island LLCs owe a $400 annual charge to the Division of Taxation, due regardless of income or activity, plus a separate $50 Annual Report filed with the Secretary of State each year between February 1 and May 1. Missing the Annual Report deadline by more than 30 days adds a $25 penalty.
Partially. Your operating agreement can limit or eliminate personal liability for breach of duty, but never for breach of the duty of loyalty, bad-faith or intentionally wrongful conduct, unlawful distributions, or an improper personal benefit taken without informed consent (R.I. Gen. Laws Section 7-16-18). Unlike California, Rhode Island doesn't require this modification to be in writing.