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Washington Single-Member LLC Operating Agreement

Create a Washington single-member LLC operating agreement with state-specific guidance on RCW 25.15 defaults, fees, and liability protection.

Introduction

A single-member LLC operating agreement is the internal document where you, as the sole owner of a Washington LLC, set the rules for how your business runs, how profits are handled, and what happens if you close the business later. Washington does not require an operating agreement to be in writing, oral or implied agreements are legally valid, but state law also lets your agreement modify or eliminate most fiduciary duties you would otherwise owe the LLC, which makes writing your intentions down more important here than in states that guardrail those duties tightly. It is still the clearest evidence, if a court or the IRS ever asks, that you are running a real business.

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Key Things to Know

  1. 1

    Washington does not require an operating agreement to be in writing. RCW 25.15.006(8) defines it as the members' agreement, 'whether oral, implied, in a record, or in any combination.'

  2. 2

    Without an operating agreement, Washington law allocates distributions in proportion to the agreed value of each member's capital contributions, not split evenly (RCW 25.15.206).

  3. 3

    A charging order is the exclusive statutory remedy for a member's personal creditors against that member's LLC interest (RCW 25.15.256), stated more explicitly than in some other states, though no Washington case addressing an alter-ego exception to that exclusivity was found.

  4. 4

    Washington LLCs have no flat annual franchise tax. The recurring state obligation is a $70 Annual Report to the Secretary of State, due each year by the LLC's formation-anniversary month.

  5. 5

    Washington allows an operating agreement to modify, restrict, or fully eliminate fiduciary duties, broader than many states. It can never eliminate the duty to avoid intentional misconduct or knowing legal violations, or the implied duty of good faith and fair dealing (RCW 25.15.038).

  6. 6

    The operating agreement itself is not filed with the state. You form the LLC by filing a Certificate of Formation ($180 fee) with the Washington Secretary of State.

  7. 7

    If a sole member dies or withdraws, the LLC dissolves 90 days later unless a successor is admitted as a member by then (RCW 25.15.265), so naming a successor in your agreement matters.

Key decisions before you file

Before you file a LLC Operating Agreement in Washington, 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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Washington Requirements for LLC Operating Agreement

  • Operating Agreement Authority (RCW 25.15.018)

    The Operating Agreement governs the relations among the Members and between the Members and the LLC, and the rights and duties of a person acting as a Manager, except for a short list of nonwaivable protections: the LLC's power to sue and be sued, the choice of Washington law, the core duty and liability limits under RCW 25.15.038(6)-(7), indemnification limits under RCW 25.15.041, and certain records and dissolution rules (RCW 25.15.018(3)). Where the Agreement is silent, the Washington LLC Act supplies the default rule.

  • Member-Managed vs. Manager-Managed Structure (RCW 25.15.006, 25.15.151, 25.15.154)

    A Washington LLC is member-managed by default; it becomes manager-managed only if the Operating Agreement vests management in one or more managers (RCW 25.15.006(10), (12)). In a member-managed LLC, each member is an agent of the LLC and ordinary-course decisions are made by a majority of the members (RCW 25.15.151). In a manager-managed LLC, managers are elected by a majority of the members and hold office until a successor is elected (RCW 25.15.154).

  • Capital Contributions (RCW 25.15.191)

    A member's contribution to a Washington LLC may consist of cash, other tangible or intangible property, services already performed, a promissory note, or another agreement to contribute cash, property, or future services (RCW 25.15.191). The Operating Agreement should state each member's initial contribution and any obligation to make additional contributions later.

  • Profit and Loss Allocation (RCW 25.15.206)

    Unless the Operating Agreement provides otherwise, distributions are made to members in proportion to the agreed value of each member's contributions made, and any contributions still owed, not split evenly among members (RCW 25.15.206). The Operating Agreement can set a different split.

  • Distributions (RCW 25.15.231)

    A Washington LLC may not make a distribution if, after giving it effect, the LLC could not pay its debts as they come due in the ordinary course of its activities, or the LLC's liabilities would exceed the fair value of its assets (RCW 25.15.231). A distribution made in violation of the Operating Agreement is also prohibited.

  • Voting Rights and Decision-Making (RCW 25.15.121, 25.15.151)

    In a member-managed LLC, a matter in the ordinary course of business may be decided by a majority of the members, but amending the Operating Agreement, admitting a new member, and dissolving the LLC each require the affirmative vote of all members unless the Agreement sets a different threshold (RCW 25.15.121, 25.15.151). The Operating Agreement may also create classes of membership with different voting rights.

  • Fiduciary Duties (RCW 25.15.038)

    Members in a member-managed LLC and managers owe duties of loyalty and care to the LLC and its members. The Operating Agreement may modify, restrict, or eliminate these duties, but can never eliminate the duty to avoid intentional misconduct and knowing violations of law, the distribution restrictions under RCW 25.15.231, or the implied duty of good faith and fair dealing (RCW 25.15.038(6)).

  • Transfer of Membership Interests (RCW 25.15.251)

    Unless the Operating Agreement provides otherwise, a person who receives a transferred LLC interest gains no right to participate in management or to access the LLC's records, and does not become a member, even after acquiring the entire interest, without the consent the Agreement requires (RCW 25.15.251). The transferee is entitled only to the distributions the transferor would have received.

  • Withdrawal or Dissociation of Members (RCW 25.15.131)

    A member of a Washington LLC may withdraw at any time, an unconditional default right (RCW 25.15.131), but a withdrawing member has no right to any payment from the LLC as a result of the withdrawal unless the Operating Agreement provides otherwise. The Agreement can restrict this default withdrawal right or set buyout terms.

  • Dissolution and Winding Up (RCW 25.15.265, 25.15.297)

    A Washington LLC dissolves upon the first to occur of: a dissolution date stated in the certificate of formation, an event specified in the Operating Agreement, the written consent of all members, judicial or administrative dissolution, or 90 days after the LLC's last remaining member dissociates, unless a successor member is admitted by then (RCW 25.15.265). This 90-day rule matters most for a single-member LLC: naming a successor in the Operating Agreement can prevent a forced dissolution.

  • Amendment Procedures (RCW 25.15.121)

    Amending the Operating Agreement requires the affirmative vote of all members unless the Agreement itself sets a different threshold (RCW 25.15.121). Washington's LLC Act does not separately set a lower default amendment-voting threshold; the all-member-consent default applies unless the Agreement changes it.

  • Indemnification (RCW 25.15.041)

    A Washington LLC may indemnify a member or manager against judgments, settlements, penalties, fines, or expenses incurred because that person is or was a member or manager, but not for conduct finally adjudged to be intentional misconduct, a knowing violation of law, or a violation of the distribution restrictions in RCW 25.15.231 (RCW 25.15.041).

Frequently Asked Questions