Illinois LLC Operating Agreement (2026)

Single-member or multi-member operating agreement under your state's LLC act: ownership, management, capital, distributions, transfers and dissolution.

Updated September 2026≈ 9 minReviewed against 805 ILCS 180/1-1 et seq. · 805 ILCS 180/1-5, 180/15-5 · 805 ILCS 180/50-1

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What you'll get

Sample first page of the LLC Operating Agreement. Your answers fill in the blanks; the clauses required in Illinois are added automatically.

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What this document covers

Formation, name, purpose and registered agent
Tax classification (default, S corp, C corp)
Members, contributions and percentage interests
Capital accounts and additional contributions
Allocations, distributions and tax distributions
Member- or manager-managed; voting and major decisions
Duties, other activities and deadlock (50/50)
Liability and indemnification
Transfers, right of first refusal and buy-out events
Withdrawal, dissolution, Schedule A and spousal consent

Illinois rules that this document follows

LLC statute	Illinois Limited Liability Company ActSource: 805 ILCS 180/1-1 et seq.
Formation document / filing office	Articles of Organization — Illinois Secretary of State
Operating agreement required?	Not required by statute, but strongly recommended (may be oral; written is far safer)Source: 805 ILCS 180/1-5, 180/15-5 (operating agreement may be oral, implied, in a record, or any combination since 2017)
Formation fee	$150.00
Annual report	$75.00 — Annual report due before the first day of the anniversary monthSource: 805 ILCS 180/50-1
State LLC / franchise tax	Personal property replacement tax 1.5% of net income (35 ILCS 5/201(c))
Duty-of-loyalty waiver	May be limited only if not manifestly unreasonable; competing activities require disclosureSource: 805 ILCS 180/15-1 (majority of members), 180/25-1 (equal shares), 180/30-20 (charging order exclusive; foreclosure permitted)
Charging order exclusive remedy (SMLLC)	unclearSource: 805 ILCS 180/15-1 (majority of members), 180/25-1 (equal shares), 180/30-20 (charging order exclusive; foreclosure permitted)

Rules current as of 2026-10-27. Statutes change; verify before relying on them.

How to use this LLC Operating Agreement in Illinois

Sign the agreement as soon as the LLC is formed and before opening the bank account. Fill Schedule A with actual contributions and percentages — they drive profits, votes and buy-outs. Multi-member LLCs should agree on the buy-out formula now, while everyone is friendly; two 50/50 members get an automatic deadlock clause.

If you elect S-corporation status, keep every distribution strictly pro rata — a single disproportionate distribution can terminate the election.

Review annually and whenever a member joins, leaves, marries, or the tax election changes. Keep it with the Articles of Organization, EIN letter and annual report receipts.

Frequently asked questions

Is an operating agreement required in Illinois?

Not by statute (805 ILCS 180/1-5, 180/15-5 (operating agreement may be oral, implied, in a record, or any combination since 2017)). Banks, investors and courts expect a written agreement, and a single-member LLC without one is easier to pierce.

What are the ongoing state fees for an LLC in Illinois?

Annual/periodic report: $75.00 (Annual report due before the first day of the anniversary month; 805 ILCS 180/50-1). Personal property replacement tax 1.5% of net income (35 ILCS 5/201(c)).

Does the operating agreement get filed with the state?

No. It is an internal document. Keep the signed original with the Company records; banks and the IRS may ask for a copy.

Why does it ask whether a member is married?

Illinois is not a community-property state, so the question only drives the optional spousal-consent language; it is still wise to have spouses acknowledge the buy-out terms.

Other names

single member LLC operating agreement
multi-member operating agreement
LLC agreement
company agreement
LLC bylaws
limited liability company agreement
operating agreement template
member-managed LLC agreement

Other states

FormsByState provides self-help document templates and general information, not legal advice. We are not a law firm. For advice about your situation consult a licensed attorney in your state.