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Tennessee LLC Operating Agreements Templates & Creation Tips (Mar. 2026)
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2026 Tennessee LLC Guides
While state law doesn’t require you to adopt a Tennessee LLC Operating Agreement, I strongly advise that every LLC should draft one.
This internal document explains how your LLC functions by outlining member responsibilities, management authority, decision-making processes, and profit allocation.
In this article, I will share tips on how to write an Operating Agreement for an LLC in Tennessee, along with free templates you can download to get started.
Tennessee LLC Operating Agreement Overview
A Tennessee LLC Operating Agreement is the primary internal document that outlines how your LLC operates day-to-day. It defines ownership interests, management structure, and the rules that govern decisions and business activities.
Under Tenn. Code Ann. § 48-206-101, LLC members are not obligated to create one, though the state recommends it. If you choose to adopt an Operating Agreement, it should be written, not oral, to guarantee clarity and enforceability.
Types Of Operating Agreements
Your Tennessee Operating Agreement should clearly describe how your LLC is managed and how it will operate. When writing a Tennessee LLC Operating Agreement, you have to choose one of two main management structures and reflect that in your Operating Agreement:
- Member-managed: All members actively manage the business and share decision-making authority. This option suits small LLCs with members who prefer a more hands-on approach.
- Manager-managed: Members nominate one or more managers to handle operations and decisions. Other members remain passive investors. This management style is better suited for larger LLCs or scenarios where some members don’t want to handle business operations.
Download Free Tennessee LLC Operating Agreement Templates
You can also review my guide on Preparing An LLC Operating Agreement In Any State for helpful state-by-state comparisons.
Matching your Operating Agreement to your chosen management structure helps ensure:
- Organized and effective operations with a clear chain of authority.
- Clearly defined roles for members and managers, which decreases mix-ups concerning duties and expectations.
- Fewer internal conflicts because decision-making responsibilities and authority are well-documented.
Where To Submit Your Tennessee LLC Operating Agreement
You don’t submit your Tennessee LLC Operating Agreement to the Secretary of State or any other government agency. Because it’s an internal document, you should store it with your official LLC records for internal reference.
Note: Every LLC member should have access to:
- A signed hard copy of the Operating Agreement.
- A secure electronic copy for backup and quick access.
Banks and lenders sometimes request this document when opening a business bank account or applying for financing.
When To Prepare Your Tennessee LLC Operating Agreement
You can draft your Tennessee LLC Operating Agreement before, during, or after creating your LLC. Each timing option offers different advantages and limitations based on member readiness and how fast you want to finalize your internal rules.
Below is an overview of each option, including the key benefits and potential drawbacks of each approach.
| Timing | Pros | Cons |
|---|---|---|
| Before formation | – Establishes clear expectations so all members begin aligned. – Lowers the chance of conflicts during the formation process. – Keeps early planning structured and coordinated. | – Requires members to settle important terms upfront. – May need revisions if roles or ownership later change. |
| During formation | – Ensures internal rules match the information submitted to the state. – Lets the Operating Agreement reflect the LLC’s structure from the start. | – May delay formation if some details are not determined promptly. – Members might need additional time to agree on specific terms. |
| After formation | – Gives members time to assess actual operational requirements. – Allows the agreement to mirror how the business truly operates. | – Produces initial uncertainty without formal written guidelines. – Can make it more challenging to document terms after habits are created. |
How To Draft Your LLC Operating Agreement In Tennessee
Creating a Tennessee LLC Operating Agreement can feel intimidating at first, but understanding its main sections makes the process manageable.
A complete Tennessee LLC Operating Agreement typically needs to include these crucial details.
1. Basic LLC Details
Start your Operating Agreement with essential business details that describe your LLC. These need to align with the ones provided in your Articles of Organization to ensure consistency.
Note: Include the following information:
- LLC’s exact name as registered with the state.
- Official formation date.
- Tennessee Registered Agent’s name and address (also known as Resident Agent).
- Brief description of business goal and activities.
- LLC duration (perpetual or limited).
- Federal tax classification election.
Adding this information creates a strong foundation for the rest of your Operating Agreement.
2. Management Structure And Responsibilities
Your Operating Agreement should explain how your LLC is managed and specify who oversees daily operations. Clearly indicate whether your LLC is member-managed or manager-managed.
Note: Include the following details in this section:
- Specify the chosen management type.
- Define the powers and authority of members and managers.
- Clarify who handles daily tasks and major decisions.
- Describe internal procedures and compliance duties.
Clearly documenting these roles helps prevent confusion and ensures smooth business operations.
3. LLC Ownership
Your Operating Agreement must list all LLC members and their ownership stakes, often called Membership Interests. These percentages impact voting, profit sharing, and decision-making authority.
Note: Include the following details in this section:
- Full names of all LLC members.
- Each member’s ownership percentage.
- Note that LLC ownership is not represented by stock.
Recording ownership guarantees every member understands their rights and stake in the LLC.
4. Initial Capital Contributions
This section outlines what each member contributes to finance the LLC initially. Contributions can include cash, property, or other agreed assets.
Note: Include the following details in your Operating Agreement:
- Names of contributing members.
- Amount or value of each contribution.
- Any additional contribution details agreed upon.
Documenting contributions increases transparency and helps prevent future conflicts.
5. LLC Tax Statement
Your Operating Agreement should specify your LLC’s federal tax classification. This is because the Internal Revenue Service (IRS) doesn’t assign it automatically.
Note: In this section, state whether your LLC is taxed as:
- A sole proprietorship for single-member LLCs.
- A partnership for multi-member LLCs.
- An S corporation (if Form 2553 is filed).
- A C corporation (if Form 8832 is filed).
Outlining these details ensures all members understand the LLC’s federal tax treatment.
6. Members’ Voting Rights
Your Operating Agreement should define how voting works and when member approval is needed. Voting is often based on ownership percentages, but it can be different as long as it’s specified.
Note: Include the following information in this section:
- How voting authority is calculated.
- Decisions that require member approval.
- Differences in voting authority for member-managed vs. manager-managed LLCs.
Having clear voting rules in place helps promote fair decision-making and reduce disputes.
7. Membership Changes And Dissolution Procedures
Lastly, your Operating Agreement should explain how the LLC handles member changes or dissolutions.
Note: In this section, include the following details:
- Procedures for adding new members.
- Rules for voluntary or involuntary removal.
- Guidelines for transferring membership interests.
- Steps for closing the LLC and distributing assets.
- Voting rules for dissolution decisions.
Documenting these procedures ensures transitions occur in an organized and predictable manner.
Tips For Drafting Your Tennessee LLC Operating Agreement
A well-prepared Tennessee LLC Operating Agreement helps your business run efficiently and decreases the risk of expensive misunderstandings.
Consider these essential tips when creating your Operating Agreement:
- Write every detail down: A written agreement documents member expectations clearly and serves as proof of how your LLC operates. Banks, lenders, and accountants rely on written agreements. On the other hand, verbal arrangements can create confusion and weaken legal protections.
- Ensure all members sign the agreement: Every LLC member should revise and sign the Operating Agreement to confirm understanding and consent. Each member should keep both a physical and digital copy for reference in case of questions or disputes.
- Keep it up to date: Your agreement should reflect your LLC’s current operations. Update it when ownership changes, management roles shift, or members join or leave. Routine updates maintain clarity and protect the agreement’s value.
Frequently Asked Questions
No, Tennessee doesn’t legally require an Operating Agreement. However, it’s highly recommended to define ownership, management, and internal rules.
Yes, you can draft your own Operating Agreement. That said, it should be in writing to clearly outline your LLC’s organization, management, and operations.
Without an Operating Agreement, your LLC needs to follow Tennessee’s default rules. Banks or lenders may also ask for a written agreement when opening accounts or looking for financing.
2026 Tennessee LLC Guides
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- Lexis.com. (2025). Tenn. Code Ann. § 48-206-101. [online] Available at: https://advance.lexis.com/document?crid=42fe7c7f-dbbb-459c-84ac-38f582191aca&pddocfullpath=%2Fshared%2Fdocument%2Fstatutes-legislation%2Furn%3AcontentItem%3A4X8M-0X10-R03N-G1FR-00008-00&pdsourcegroupingtype=&pdalertemail=False&pdcontentcomponentid=234179&pdmfid=1000516&pdisurlapi=true.