Operating Agreement LLC New Jersey

A New Jersey Limited Liability Company (LLC) Operating Agreement is an internal document that explains how the business will be governed. It outlines ownership interests, establishes management authority, and defines the procedures members will follow when making company decisions. Some refer to it as a New Jersey Operating Agreement or New Jersey LLC Company Agreement. Regardless of the terminology used, it serves as the LLC’s primary internal governance document.

Many New Jersey LLCs adopt an Operating Agreement during formation, while others prepare one later as business operations evolve. The agreement is not filed with the state and remains part of the LLC’s internal records.

Is a New Jersey Operating Agreement Required?

New Jersey does not require LLCs to maintain an Operating Agreement. Under the New Jersey Revised Uniform Limited Liability Company Act, an Operating Agreement may be written, oral, or implied. Although optional, a written Operating Agreement is strongly recommended. Without one, the LLC defaults to statutory rules that may not reflect how members intend to manage the business.

Why a New Jersey Operating Agreement Matters

Helps preserve limited liability protection

A written Operating Agreement helps demonstrate that the LLC operates as a separate legal entity. Courts may review internal records when determining whether limited liability protections apply, especially for single member LLCs.

Establishes customized internal procedures

New Jersey’s statutory default rules apply only when the Operating Agreement does not address an issue. A written agreement allows members to define voting rights, management responsibilities, distributions, and dispute resolution processes.

Required by banks and professional advisers

Banks, lenders, accountants, and attorneys often request an Operating Agreement to verify ownership and confirm who has authority to act on behalf of the LLC.

Supports compliance with New Jersey’s annual filing obligations

New Jersey LLCs must file an Annual Report each year. Assigning responsibility for this filing in the Operating Agreement helps maintain good standing.

Key Provisions to Include in a New Jersey Operating Agreement

Basic Company Details

• LLC name
• Business purpose
• Principal office address
• Duration of the LLC
• Federal tax classification

New Jersey requires LLC names to include Limited Liability Company, LLC, or an accepted abbreviation.

Registered Agent and Office

• Name and New Jersey street address of the registered agent
• Procedures for changing the registered agent
• Filing requirements with the New Jersey Division of Revenue

Member Information

• Names and addresses of members
• Ownership percentages
• Initial capital contributions

Capital Contributions

• Description of each member’s contribution
• Rules for additional contributions
• Statement that contributions do not earn interest unless agreed

Management Structure

• Whether the LLC is member managed or manager managed
• Duties and authority of members or managers
• Procedures for appointing or removing managers

Profit and Loss Allocation

• Allocation method for profits and losses
• Timing and conditions for distributions
• Confirmation that distributions may only be made if the LLC can meet its obligations

Tax Election

• Federal tax classification selected by the LLC
• Statement that certain elections require IRS filings

Voting Procedures

• Voting rights of members
• Quorum requirements
• Vote thresholds for approving actions

New Jersey LLCs commonly base voting on ownership percentages unless modified by agreement.

Transfers of Interest

• Rules for voluntary and involuntary transfers
• Admission procedures for new members
• Treatment of interests upon withdrawal, death, or expulsion

Records and Bookkeeping

• Procedures for maintaining company and financial records
• Assignment of responsibility for filing New Jersey’s Annual Report
• Statement that failure to file may result in penalties or administrative dissolution

Compensation

• Rules for compensating members, managers, or officers
• Reimbursement policies for business expenses

Dissolution

• Events that may trigger dissolution
• Steps for winding up the LLC
• Filing a Certificate of Cancellation with the New Jersey Division of Revenue

Amendments

• Procedures for modifying the Operating Agreement
• Requirement that amendments be approved in writing unless otherwise stated

Management Options for New Jersey LLCs

Member Managed

Members handle daily operations and have authority to act on behalf of the LLC. This structure is common for closely held companies. Voting rights typically align with ownership percentages unless changed in the agreement.

Manager Managed

Members appoint one or more managers to oversee daily operations. Managers may be members or nonmembers. Members retain authority over major decisions while delegating routine tasks to managers.

Creating and Maintaining the New Jersey Operating Agreement

Drafting and Signing

The Operating Agreement becomes effective once adopted by the members. New Jersey recognizes written, oral, and implied agreements, but a written document provides clarity and reduces disputes.

Recordkeeping

The agreement should be stored with the LLC’s permanent records. New Jersey requires annual reports, making organized documentation essential.

Amending the Agreement

Members may amend the Operating Agreement by following the procedures outlined within it. If amendments affect information on file with the state, the LLC must submit updated filings.