Arkansas LLC Operating Agreement: What to Include and Why

An operating agreement is a written contract among the members of an LLC that governs how the company is owned and run. It's the internal counterpart to the Certificate of Organization you file with the state: the Certificate creates the entity in the public record, while the operating agreement defines how that entity actually works behind the scenes.

Arkansas does not require you to file an operating agreement, and you never send it to the Secretary of State — it stays private among the members. But "not required to file" is not the same as "not important." Without an operating agreement, the default provisions of the Arkansas Limited Liability Company Act fill every gap, and those defaults are one-size-fits-all rules that may have nothing to do with what you and your partners actually intended.

Why you want one even for a single-member LLC

It's tempting to skip the agreement when you're the only owner, but there are real reasons not to:

• It reinforces that the LLC is a genuine separate entity — a factor courts weigh when someone tries to pierce your liability shield and reach you personally
• Many banks ask to see it when you open a business account
• It documents your intentions for succession, disability, or sale, so the answers exist before you need them
• It overrides state defaults that might otherwise apply in ways you didn't choose

The financial architecture of the LLC is the heart of the agreement, and it's where vagueness causes the most disputes later.

Ownership percentages

Spell out who the members are and what percentage each one owns. Ownership is often expressed as a percentage or as units/membership interests. Be precise — "we're roughly equal partners" is not a percentage, and it's exactly the kind of ambiguity that turns into a fight when there's real money on the table.

Capital contributions

Record what each member contributed to get the company going — cash, equipment, property, or services — and its agreed value. Then address the future: is any member obligated to contribute more later? What happens if the company needs capital and a member can't or won't put in their share? Answering this at the start prevents a crisis when the company hits a cash crunch.

Profit and loss allocation

Define how profits and losses are divided among members. This often tracks ownership percentage, but it doesn't have to — members can agree to a different split, and the agreement is where you document it. Be explicit, because the default assumption may not match a deal where one member put in the money and another put in the work.

Distributions

Allocation of profit on paper and cash actually reaching members' pockets are two different things. Set out when and how distributions are made — on a schedule, at the managers' discretion, or when certain thresholds are hit — and in what priority. This is one of the most common sources of member conflict, so getting it in writing pays off.

The agreement should make it unambiguous who runs the company and how decisions get made, so day-to-day operations and big pivots both have a clear path.

Member-managed or manager-managed

Decide and document the management structure. In a member-managed LLC, all members participate in running the business. In a manager-managed LLC, you designate one or more managers to run operations while other members can be passive investors. State which structure applies and, if manager-managed, name the managers and define their authority.

Decision thresholds

Not every decision should require the same level of agreement. Routine operational choices might rest with a manager or a simple majority, while major moves — taking on debt, admitting a new member, selling the business, amending the agreement — often call for a supermajority or unanimous consent. Lay out which decisions need what, so no one is blindsided by a unilateral move on something big.

Voting rights

Specify how votes are counted. Are they weighted by ownership percentage, or does each member get one vote regardless of stake? Both approaches are valid; what matters is that you choose and write it down. In a two-member LLC, also think through how you'll break a deadlock, because a 50/50 split with no tiebreaker can paralyze the company.

Companies change. Members want out, pass away, get divorced, or simply want to sell. The agreement should anticipate these moments so they don't blow up the business.

Transfer restrictions

Decide what happens when a member wants to sell or transfer their interest. Most LLCs include a right of first refusal — giving the company or the other members the chance to buy the departing member's stake before it can be sold to an outsider — and require approval before a new member can join. Without these, a member could sell to someone the others never agreed to partner with.

Buyout and departure terms

Define how a departing member's interest is valued and paid out, and what triggers a buyout — voluntary exit, death, disability, or removal for cause. A clear valuation method (a formula, an appraisal process, or an agreed figure) prevents the ugliest disputes, which almost always arise when a member leaves and the parties can't agree what the interest is worth.

Dissolution

Set out the circumstances under which the LLC winds down and how remaining assets are distributed after debts are settled. This dovetails with the formal dissolution process you'd file with the Secretary of State — the agreement handles the internal "how," while the state filing handles the official closure.

An operating agreement isn't a document you sign once and forget. To keep serving its purpose, it has to stay aligned with reality.

Sign it and keep it with your records

Have every member sign the agreement and keep the executed copy with your LLC's important records alongside your Certificate of Organization and EIN confirmation. An unsigned draft carries far less weight if it's ever tested.

Amend it when things change

When ownership shifts, a member joins or leaves, or the way you run the company changes, update the agreement rather than letting it drift out of date. Build the amendment process into the agreement itself — usually a specified member vote — so changes are made cleanly and everyone consents.

Where Mainstay Filing fits

Mainstay Filing handles your state-facing paperwork — the Certificate of Organization, registered agent service, and your annual franchise tax deadline — so the entity is properly formed and stays in good standing. The operating agreement itself is a legal document tailored to your ownership and deal terms, and drafting one that truly fits your situation is a job for an attorney, especially in a multi-member LLC where real money and control are at stake. We're a filing and agent service, not a law firm, so we'll get the company formed correctly while you get the agreement drafted by someone qualified to advise on its terms.