Arizona LLC Operating Agreement Free Templates & Detailed Guidance (Apr. 2026)

An Operating Agreement (OA), also known as “Limited Liability Company Agreement,” “LLC Agreement,” or “Company Agreement,” is not legally required when forming an LLC in Arizona.

However, it is highly recommended because it protects your LLC from internal disputes and potentially costly legal conflicts.

In this article, you will find all the essential information about Arizona LLC Operating Agreements. You can also download a free template to complete your own.

What Is An Arizona LLC Operating Agreement?

An Arizona LLC Operating Agreement is a written contract between the LLC members, also known as the LLC owners. It is an internal, legally binding document that is kept in your records.

It outlines how your LLC will manage essential procedures such as voting, transferring membership interests, allocating profits and losses, and handling dissolution if the business closes.

If your Arizona LLC does not have an Operating Agreement, your business will be governed by the Arizona Limited Liability Company Act (ALLCA).

Your LLC Operating Agreement must comply with state requirements and cannot override or contradict Arizona law, as stated in A.R.S § 29-3105.

Arizona allows both member-managed and manager-managed LLCs, and the Operating Agreement template you choose should match your LLC’s management structure.

1. Member-Managed LLC

A member-managed LLC is a structure where all members have the authority to legally bind the LLC in contracts and agreements. The LLC members actively manage the business and handle day-to-day operations.

2. Manager-Managed LLC

A manager-managed LLC is a structure where one or more designated individuals, known as LLC managers, have the authority to legally bind the LLC in contracts and agreements. The LLC managers oversee business operations and make management decisions on behalf of the company.

In this structure, members take on a passive or investor role. However, they retain the right to vote managers into their positions and must vote on major decisions, such as adding or removing an LLC member.

3. Which Management Structure Should You Choose?

The management structure you choose depends on how you want your LLC to operate.

You can review my Member-Managed Vs. Manager-Managed LLCs article for a detailed analysis.

In most cases, a member-managed LLC Operating Agreement is recommended, as it is the most common and straightforward management structure for small businesses.

You can download free Operating Agreement templates designed for each management type here:

Where To Keep Your Arizona Operating Agreement

Your Arizona Operating Agreement does not need to be mailed or submitted to any government agency.

Instead, you store it safely with your company’s other important business records. Each member should also have their own signed copy.

What Should Be Included In Your Arizona LLC Operating Agreement?

Your Arizona LLC Operating Agreement should include the essential information that defines your company’s structure, ownership, and internal procedures.

1. Your LLC Basic Information

Your Operating Agreement must include basic information about your LLC. This information should match what is listed in your Arizona LLC Articles of Organization.

• LLC name: The official name listed on your LLC Articles of Organization.
• LLC principal address: The address where your business activities will be conducted.
• LLC effective date: The date your LLC is legally recognized and authorized to conduct business.
• Registered agent (If applicable): The individual or business entity responsible for receiving legal documents and official notices on behalf of the LLC.
• Duration of your LLC: The intended length of time the LLC will exist, either perpetual or for a specific term.
• Management structure: Specifies whether the LLC is member-managed or manager-managed and outlines who is responsible for daily operations, decision-making, and compliance with laws.

2. Tax Statement

Your Operating Agreement must state how your LLC will be taxed.

By default, a single-member LLC is taxed as a sole proprietorship, while a multi-member LLC is taxed as a partnership.

You can also elect for your LLC to be taxed as a C-corporation or an S-corporation by filing the appropriate forms with the IRS.

3. LLC Ownership

Your Operating Agreement should list all LLC members and specify how much of the company each member owns.

he official term for ownership in an LLC is “LLC membership interest.”

Membership interest is typically expressed as a percentage, such as 5%, 50%, or 100%.

4. Initial Capital Contributions

After filing your Arizona Articles of Organization, you should open a business bank account in the LLC’s name. This separates your personal finances from your business funds.

Each LLC member must make an initial capital contribution, which is the amount of money deposited into the LLC’s bank account.

5. Voting Rights Of LLC Members

Your Operating Agreement should clearly define how voting power is distributed among members.

In a member-managed Operating Agreement, voting power is typically proportionate to each member’s LLC membership interest.

In a manager-managed Operating Agreement, voting power is also proportionate to membership interest. Members vote to elect one or more managers, who then have the authority to make certain business decisions without requiring a member vote.

However, major actions, such as adding or removing a member, must be approved by a vote of the members, and managers do not have authority in these matters.

Why Your Arizona LLC Needs An Operating Agreement

Although the State of Arizona does not require an LLC to have an Operating Agreement to form the business, it is highly recommended to create one in writing.

The following key reasons justify having an Operating Agreement:

1. Establish Proof Of LLC Ownership

In Arizona, the Articles of Organization do not always list all members of the LLC. Your Operating Agreement should disclose every member and their ownership percentage.

This document serves as official proof of ownership within the LLC. Banks often require a copy of the Operating Agreement before allowing you to open a business bank account.

Other third parties, such as landlords or investors, may also request a review of it for verification of ownership and authority.

2. Strengthen Your Limited Liability Protection

Following your LLC’s Operating Agreement helps demonstrate that the company operates as a separate legal entity from its members. This separation is reinforced when you open a dedicated business bank account that is kept separate from personal accounts.

A written Operating Agreement is a legally binding document that carries full weight in court if you ever need to defend your business in a lawsuit. In contrast, a verbal agreement is much harder to prove and holds little legal authority.

3. Reduce The Risk Of Member Disputes

Even if LLC members share a close relationship, disagreements may arise over time. An Operating Agreement provides a clear process for resolving disputes and helps ensure that the business remains stable during conflicts or misunderstandings.

4. Customize Rules And Override State Defaults

If your LLC does not have an Operating Agreement, it will be governed by the default provisions of the Arizona Limited Liability Company Act (ALLCA).

These default laws may not align with your business needs.

For example, under A.R.S. § 29-3403, a verbal promise to contribute capital cannot be enforced. The obligation must be in writing and signed.

By including clear contribution terms in your Operating Agreement, you can override this default rule and ensure that each member is legally bound to provide their agreed-upon contributions.

This includes both initial capital contributions and any future contributions that members agree to make.

When Should You Write An LLC Operating Agreement In Arizona?

Arizona does not require LLCs to submit an Operating Agreement, so there is no official deadline to create one.

However, here are my insights regarding when you should create an Operating Agreement:

Tips For Your Arizona Operating Agreement

If you decide to create an Operating Agreement for your LLC, here are some important tips to follow.

1. Put It In Writing

While a verbal agreement can outline your intentions, only a written Operating Agreement is legally binding. A written document provides clear, enforceable proof of the terms agreed upon by all members.

For example, if a disagreement arises over profit distribution or ownership rights, a signed written Operating Agreement will serve as legal evidence in court, whereas a verbal agreement will not.

2. Sign The Agreement

All members should review, agree to, and sign the Operating Agreement to make it legally binding.

If you do not have a signed Operating Agreement, you may need to hire costly legal assistance to prove member obligations and rights that could have been clearly established through signatures.

Each member should also retain a signed copy of the Operating Agreement for records and future reference.

3. Keep It Updated

As your business grows or changes, you should update your Operating Agreement to reflect current ownership, management structure, and operational procedures.

Revising your Operating Agreement ensures it always aligns with your LLC’s actual business activities and protects all members’ interests.

4. Include Key Details

Your Operating Agreement should include as much relevant detail as possible, including the items discussed in the sections above.

Think carefully about your daily business operations and potential issues that could arise between members or with third parties before finalizing the document.

The biggest benefit of a detailed Operating Agreement is that it minimizes confusion, prevents internal disputes, and provides a clear legal framework for decision-making within your LLC.

Frequently Asked Questions