An operating agreement is the document that says who owns your LLC, how much of it they own, and who decides what happens next. It is not the document you file to create the company. That is the articles of organization, or in Delaware, the certificate of formation. The operating agreement is the one that stays in your files, not the state's.
Founders ask two different questions about it, and the answers are different. Does the law require one? No, not in writing, not anywhere. Should you have one anyway? Almost always yes, for reasons that have nothing to do with what the statute says.
What the law actually asks for
Delaware, Wyoming and California all define "operating agreement" the same basic way, and none of the three requires you to write it down.
Delaware's LLC Act, at 6 Del. C. § 18-101(9), defines it as "any agreement (whether referred to as a limited liability company agreement, operating agreement or otherwise), written, oral or implied, of the member or members as to the affairs of a limited liability company and the conduct of its business." Delaware does not even use the term "operating agreement" as its legal name. The statute's official term is "limited liability company agreement." Operating agreement is just the name everyone uses in practice.
Wyoming's statute, W.S. § 17-29-102, defines the term the same way, and § 17-29-110 describes what it does: the operating agreement governs relations among the members and between the members and the company, and it governs the activities of the company. Where the agreement is silent, the statute fills the gap.
California's statute follows the identical pattern. Cal. Corp. Code § 17701.02(s) defines it, again allowing "oral, in a record, implied, or in any combination thereof." Section 17701.10 describes the scope: the agreement governs the internal affairs of the LLC and the conduct of its business, and the chapter's default rules apply to anything the agreement does not cover.
Three things follow from reading the actual text.
First, an operating agreement can be a handshake. All three states say so explicitly. A verbal understanding between co-founders counts as an operating agreement, legally, even with nothing on paper.
Second, none of the three states uses a word like "shall" to force you to create one, and none requires you to file it with the Secretary of State. It is not a public record. It sits in your own files, if it exists at all.
Third, California has a specific rule worth knowing if you run the company alone: the definition at § 17701.02(s) states that a single-member LLC's operating agreement "shall not be unenforceable by reason of there being only one person who is a party to the operating agreement." Some founders assume a one-person company cannot have — or does not need — an operating agreement. The statute says otherwise.
One claim shows up often in formation-service blogs and it does not hold up: that California makes an operating agreement legally mandatory. Read the actual text of § 17701.02(s), and it is a definition, nothing more. There is no "shall" in it. What is true, and what probably created the confusion, is a separate practical point: a verbal agreement is nearly impossible to prove later, and California's courts do not treat "we agreed out loud" as strong evidence in a dispute. Legally optional and practically safe are two different questions.
🇺🇸 If the IRS counts you as a U.S. person
None of the three states above will stop you from running your LLC with no written operating agreement. Nobody checks. Nobody asks for it at formation.
Where it catches up with you:
- Your bank will usually ask for one. Most U.S. banks require a written operating agreement to open a business account, even for a single-member LLC where the law does not require one at all. This is the bank's own policy, not a state law, and it varies by bank.
- A co-founder dispute with nothing in writing becomes a negotiation with no reference point. If two people never wrote down who owns what and who decides what, "we agreed on this" is one person's word against another's.
- An investor, if one ever shows up, will ask for it before signing anything. No serious investor puts money into a company that cannot show who owns what.
🌏 If it does not
The statutes above never distinguish based on where the members live. If you are not a U.S. person for tax purposes, the same rule applies to you: no state requires a written operating agreement, and a verbal one is legally valid in all three states discussed here.
What changes for you is the practical stakes, not the legal rule:
- A U.S. bank account is already the hardest step in the process for a non-resident. Banks routinely ask for the operating agreement as one of the first documents in that process. Showing up without one adds a delay you do not need.
- You cannot walk into a branch to sort out a document problem in person. If the bank has a question about your operating agreement, you are resolving it by email, from another country, on their schedule.
- A payment processor (Stripe, PayPal, and similar) may ask for the same document when it reviews your account, for the same reason a bank does: to confirm who actually controls the company.
What is the same, and what actually differs
| 🇺🇸 U.S. person | 🌏 Not a U.S. person | |
|---|---|---|
| Does the state require a written operating agreement? | No | No |
| Is a verbal agreement legally valid? | Yes, in Delaware, Wyoming, and California | Yes, same statutes, same answer |
| Is it filed with the state? | No, it is a private document | No, it is a private document |
| Does a single-member LLC still need one? | Optional, but recommended | Optional, but recommended |
| Will a bank ask for one anyway? | Usually, yes | Usually, yes — and it is often the first document requested |
The legal rule does not change based on residency. What changes is how much a written operating agreement is doing for you in practice. For a non-resident, it is frequently the document that unblocks the bank account, not a formality you can defer.
Common mistakes
🇺🇸 If the IRS counts you as a U.S. person
- Assuming a single-member LLC has no owner-related decisions to write down. It still has to say what happens to the company if you die, sell it, or bring on a partner later.
- Treating the operating agreement as something to write after the bank asks for it, instead of before. Banks can take weeks longer to approve an account when the document arrives late, mid-application.
- Copying a free template found online without changing the state name inside it. A Delaware template with California statute references left in it raises questions with anyone who reads it closely.
🌏 If it does not
- Believing "the LLC is a U.S. company, so U.S. paperwork rules do not apply to me personally." The operating agreement question is about the company's internal governance, not about your own tax residency.
- Starting the bank account application without the operating agreement ready, then discovering it is the one document holding up approval by weeks.
- Relying on an oral agreement between co-founders who live in different countries. It is legally valid under all three statutes discussed here, but it is close to impossible to prove from abroad if the relationship goes wrong.
FAQ
Do I legally have to have an operating agreement for my LLC?
No. Delaware, Wyoming, and California all define an operating agreement broadly enough to include an oral or implied agreement, and none of them requires you to put it in writing or file it with the state.
Is the operating agreement filed with the Secretary of State?
No. It is a private, internal document. What you file with the state is the formation document — articles of organization in most states, or a certificate of formation in Delaware.
Does a single-member LLC need an operating agreement?
Not legally. California's statute specifically confirms that having only one member does not make the agreement invalid. Most single-member LLCs still write a short one because banks ask for it and because it makes clear what happens to the company if the owner dies or becomes unable to run it.
Can my operating agreement just be a verbal agreement with my co-founder?
Legally, yes, in all three states discussed here. Practically, a verbal agreement is very hard to prove later if the co-founders disagree about who owns what or who has authority to sign a contract.
Why does my bank keep asking for an operating agreement if it is not legally required?
The state does not require it, but your bank's own internal policy does. Banks use the operating agreement to confirm who actually controls the LLC and who is authorized to open or manage the account. This is a bank policy question, not a state law question.
Is California's operating agreement rule stricter than Delaware's or Wyoming's?
No. All three statutes define it the same way and none of them requires a written document. The claim that California legally mandates a written operating agreement does not match the actual text of the statute, which is a definition section with no requirement language in it.
What happens if I never write an operating agreement at all?
The state's default rules fill the gap. Wyoming and California both say the statute governs anything the agreement does not cover. That means decisions about profit splits, voting, and what happens if a member leaves get decided by the state's default rules instead of by your own choices — often not the outcome you would have picked.
Does the operating agreement need to be signed by every member?
The statutes reviewed here do not set a signature requirement, since an oral or implied agreement counts as valid. In practice, banks and courts give far more weight to a document every member has signed than to one nobody signed at all.