California LLC Operating Agreement — Internal Governance

California does not legally require a written operating agreement, but the California Revised Uniform LLC Act recognizes the operating agreement as the primary governance document. Without one, the default statutory provisions of the Act govern — which may not match member intentions. For the full process, see our CA LLC guide.

California-Specific Default Rules (Without an Agreement)

If you do not have an operating agreement, Corp Code defaults apply:

• Profit/loss allocation (under the California Revised Uniform LLC Act): Based on each member's contribution (agreed value of contributions to the LLC). NOT equal sharing.
• Distributions (under the California Revised Uniform LLC Act): Equal shares to members (different basis than profit allocation)
• Management (under the California Revised Uniform LLC Act): Member-managed — each member has equal management rights
• Voting: Each member has equal voting rights regardless of contribution
• Transfer: Member may transfer economic interest but not management rights without other members' consent

Key California distinction: The default for profit allocation (contribution-based) differs from the default for distributions (equal). This mismatch can create confusion without a clear written agreement.

Community Property Implications

California is a community property state. If a married member uses community funds to invest:

• The non-member spouse may have a community property interest in the membership
• Divorce proceedings can affect LLC ownership
• Your operating agreement should address: spousal consent requirements, what happens in divorce, whether membership interests are community or separate property
• Consider requiring spousal consent forms for all membership transfers

Single-Member LLC Operating Agreements in California

Even though not legally required, a single-member operating agreement is critical for:

• Banks (most require it to open an account)
• Proving LLC separateness (veil piercing defense)
• Establishing succession (what happens if you die or become incapacitated)
• Strengthening your LLC's identity as a separate entity from yourself

FAQ

Is an operating agreement filed with the state?

No. It is a private internal document. Keep it with your business records.

Can we use a generic template?

A California-specific template is recommended. It should reference the California Revised Uniform LLC Act and address California's community property implications (which generic templates from other states will not cover).

What if members disagree later?

Without a written agreement, you are stuck with statutory defaults and must litigate disputes. With an agreement, you have a contractual framework including dispute resolution procedures. This is why having one is critical for multi-member LLCs.