Operating Agreement LLC West Virginia

A West Virginia Limited Liability Company (LLC) Operating Agreement is an internal governance document that outlines how the company will operate. It describes ownership interests, management authority, and the procedures that the members will follow in running the business. Some refer to it as a West Virginia Operating Agreement or West Virginia LLC Company Agreement. Regardless of the name, it serves as the primary internal legal record for the LLC.

Many business owners adopt an Operating Agreement during formation, while others create one later as the company’s needs evolve. This document is not filed with the state and is maintained within the LLC’s internal records.

Is a West Virginia Operating Agreement Required?

West Virginia does not require LLCs to adopt an Operating Agreement. Under the West Virginia Uniform Limited Liability Company Act, the agreement may be written, oral, or implied. Even though it is not required, a written Operating Agreement is strongly recommended. Without one, the LLC defaults to statutory rules in Chapter 31B, which may not reflect how the members intend to run the business.

Why a West Virginia Operating Agreement Matters

Maintains limited liability protection

A written Operating Agreement helps establish the LLC as a separate legal entity. Courts may examine how well an LLC observes internal procedures when determining whether to uphold limited liability protections. For single member LLCs, a written agreement provides important documentation showing separation between the owner and the business.

Establishes internal rules and expectations

West Virginia’s statutory provisions apply only when the Operating Agreement is silent. By creating a written agreement, members can define voting rights, management roles, financial distributions, dispute resolution procedures, and other operational rules that suit the LLC’s needs.

Required by financial institutions and third parties

Banks, lenders, and accountants often request an Operating Agreement before approving accounts or financing. The agreement clarifies ownership, authority to act on behalf of the LLC, and the company’s internal structure.

Key Provisions to Include

A West Virginia Operating Agreement typically includes the following:

Basic Company Details

• LLC name
• Business purpose
• Principal office
• Duration
• Federal tax classification. West Virginia requires LLC names to include Limited Liability Company, LLC, or a similar abbreviation.

Registered Agent and Office

• Identifies the West Virginia registered agent responsible for receiving legal documents
• Any change must be filed with the West Virginia Secretary of State

Member Information

• Names and addresses of all members
• Ownership percentages
• Initial capital contributions

Capital Contributions

• Cash, property, or services contributed by each member
• Clarification that members are not automatically entitled to interest on contributions

Management Structure

• Whether the LLC is member managed or manager managed
• Description of management authority, responsibilities, and limits

Profit and Loss Allocation

• How profits and losses will be allocated to members
• How and when distributions will be made
• Confirmation that distributions may be made only if the LLC can satisfy its debts

Tax Election

• Federal tax classification chosen by the LLC
• Statement that certain elections require IRS filings

Voting Procedures

• Voting rights
• Quorum requirements
• Decision making thresholds. Many West Virginia LLCs base voting power on ownership percentage unless stated otherwise.

Transfers of Interest

• Procedures for adding or removing members
• Rules for transfers due to withdrawal, death, or expulsion
• Buyout procedures or valuation methods

Records and Bookkeeping

• How financial statements, meeting notes, and tax filings will be maintained
• West Virginia’s Annual Report requirement with the Secretary of State
• Note that failure to file may result in administrative dissolution

Compensation

• How members, managers, or officers will be compensated if compensation is provided

Dissolution

• Events that may trigger dissolution
• Steps for winding up company operations
• Filing Articles of Termination with the West Virginia Secretary of State

Amendments

• How the Operating Agreement may be amended: Most West Virginia LLCs require written member approval for changes.

Management Options for West Virginia LLCs

Member Managed

In a member managed LLC, members oversee daily operations and may bind the company through their actions. This structure is often used by small businesses where all owners participate in management. Voting typically corresponds to ownership percentages unless stated otherwise.

Manager Managed

In a manager managed LLC, one or more managers handle day-to-day operations. Managers may be members or outside individuals. Members retain control over major decisions but delegate operational authority to the managers.

Creating and Maintaining the West Virginia Operating Agreement

Drafting and Signing

The Operating Agreement becomes effective once adopted by the members. West Virginia permits written, oral, and implied agreements, but a written document is preferred for clarity. The agreement is not filed with the Secretary of State.

Recordkeeping

The agreement should be stored with the LLC’s permanent records at its principal office. Each member should retain a copy. West Virginia requires LLCs to file an Annual Report, making proper record maintenance especially important.

Amending the Agreement

Members may amend the agreement according to the procedure outlined in the document. If the amendment affects information filed with the state, such as the registered agent or business address, the LLC must submit the appropriate update to the West Virginia Secretary of State.