As a business attorney who has drafted hundreds of entity governance documents over the past 12 years, I’m often asked: “Do I need an operating agreement or bylaws?” The short answer is—it depends on whether you formed an LLC or a corporation. In this comprehensive guide, I’ll explain the key differences between an operating agreement and bylaws, when you need each, and why most LLC owners should prioritize a rock-solid operating agreement. Best of all, I’ve included a free downloadable LLC operating agreement template (updated for 2025) at the end of this article.
Important Disclaimer: This article and the free template are for educational purposes only and do not constitute legal advice. Laws vary by state, and your situation may require customization. Always consult a licensed attorney or tax professional before finalizing your governance documents.
An LLC operating agreement is the foundational governing document for a limited liability company (LLC). Even though most states (including Delaware, California, Texas, New York, and Florida) do not require you to file the operating agreement with the state, the IRS and virtually every court will treat an LLC without a written operating agreement as a general partnership for tax and liability purposes in many scenarios.
According to IRS Revenue Ruling 88-76 and countless state court decisions, a properly drafted operating agreement is what preserves your limited liability protection and allows you to elect your preferred tax treatment (sole proprietorship, partnership, S-corp, or C-corp).
Key topics typically covered in an operating agreement:
Corporate bylaws are the internal rulebook for a corporation (Inc. or C-corp/S-corp). Unlike an operating agreement, bylaws are almost never filed with the state, but they are required by virtually every state’s corporation statute (e.g., Delaware General Corporation Law § 109).
Bylaws typically address:
| Feature | LLC Operating Agreement | Corporate Bylaws |
|---|---|---|
| Entity Type | Limited Liability Company (LLC) | Corporation (Inc., C-corp, S-corp) |
| Required by State Law? | Rarely required to be filed, but strongly recommended (CA, NY, MO require written agreement) | Not filed, but required to exist under most state statutes |
| Tax Flexibility | High (default partnership, can elect S-corp or C-corp) | Rigid (C-corp default, can elect S-corp) |
| Management Structure | Member-managed or manager-managed | Board of directors + officers |
| Ownership Evidence | Membership interest certificates (optional) | Stock certificates |
| IRS Recognition | Critical for partnership/S-corp tax status (Treas. Reg. § 301.7701-3) | Articles + bylaws establish corporate status |
Yes—absolutely. Many entrepreneurs mistakenly believe that a single-member LLC (SMLLC) doesn’t need an operating agreement. The IRS disagrees.
In 2017, the Tax Court case Pierre v. Commissioner (152 T.C. 161) made it clear that even a disregarded entity needs a written operating agreement to support deductions and separate the business from personal affairs. Banks, title companies, and commercial landlords now routinely require a written operating agreement—even for single-member LLCs.
From my decade-plus of practice, I’ve seen the same expensive mistakes repeatedly:
I’ve updated my most popular template to reflect 2025 IRS guidelines, current case law, and the new beneficial ownership reporting requirements under the Corporate Transparency Act (effective January 1, 2024, with ongoing filings in 2025).
Download the Free LLC Operating Agreement Template (Word .docx format)
Click here to download instantly – no email required
This 18-page template includes:
No. Using both creates confusion and potential legal conflict. LLCs are governed by an operating agreement; corporations are governed by bylaws.
Delaware does not require a written operating agreement to be filed, but Delaware courts strongly encourage one (see Elf Atochem v. Jaffari).
No. Unlike Articles of Organization, operating agreements remain private unless you voluntarily file them (e.g., California requires a Statement of Information but not the agreement itself).
You can, but most online generic templates lack critical provisions. The free template provided here was drafted by an experienced attorney and is far superior to most $19–$99 online options.
Whether you’re launching a side hustle, real estate holding company, or tech startup, taking 30 minutes to complete a proper LLC operating agreement is one of the highest-ROI activities you’ll ever do as a business owner. Skip it, and you’re gambling with your personal assets and tax status.
Download the free 2025 LLC operating agreement template today, customize it for your state and situation, and sleep better knowing your business is properly protected.
Have questions about your specific scenario? Feel free to leave a comment below (remember, comments are not legal advice).
Sources:
IRS.gov – Limited Liability Companies: https://www.irs.gov/businesses/small-businesses-self-employed/limited-liability-company-llc
Treasury Regulations § 301.7701-3
Corporate Transparency Act Final Rule (FinCEN)