50/50 LLC Operating Agreement Template

This customizable 50/50 LLC operating agreement template is ideal for any two-member LLC where each member has an equal ownership stake. It includes provisions for management and member responsibilities, company financing, distributions, voting and decision-making, company dissolution, and more.

• Designed for an LLC with two members with 50% membership interest each
• Includes provisions for how the company is organized, member contributions, distribution of profits and losses, voting rights, and member authority
• Focuses on the specific issues that arise when members have equal ownership, such as requiring written consent for major company decisions
• Contains provisions for expenses, company records, and audit requirements, and a termination and dissolution section that is customized for jointly-owned LLCs

Download our free, editable 50/50 Partnership Operating Agreement template as a Word or PDF format. Create a two-member LLC operating agreement with an equal ownership structure easily online.

Who It’s For

When two people own a company equally, disagreements can happen if expectations are not clear. A 50/50 LLC Operating Agreement helps prevent that by putting everything in writing. So, this template is designed for two-member LLCs with equal ownership, namely:

• Two founders who are starting an LLC and plan to share equity equally.
• Two business partners who are turning a handshake deal into a written operating agreement.
• Investors who are forming an LLC to hold a property deal where they both own 50%.
• Two entrepreneurs signing up for a 50/50 joint venture who want an operating agreement drafted and in place prior to starting.
• Members of an LLC who are bringing in a second member who will have equal ownership and want it formalized.

What’s Included in the 50/50 LLC Operating Agreement Sample

Each section in this sample 50/50 LLC operating agreement corresponds with the actual language of an operating agreement for a company owned 50/50 by two parties. These include:

• Definitions of member and allocation of 50% membership interest to each party
• Capital contributions chart, which lists the money and property each member contributed to the company upon formation
• Distribution of net income and net loss equally with member income and capital accounts
• Salary, profit sharing, and partner drawing provisions, including the timing of distributions at year-end
• Member power and right to manage the company, with provisions requiring written approval for certain decisions
• Company bank account and member reimbursement of expenses
• Record-keeping, auditing, and reporting requirements for members
• Conditions for termination and dissolution of the LLC jointly owned by two members

How to Write Your 50/50 LLC Operating Agreement

The template lays out the framework. Here are five decisions you make before you fill in the blanks:

1. Be sure to detail the monetary value of each capital contribution, going beyond a simple cash figure

Sometimes one member provides equipment, intellectual property, or sweat equity instead of cash. Allocate a fair market value to those contributions and document it in the contributions table. Non-cash contributions that aren’t listed can have a value of zero. This inevitably results in complex accounting and tax complications.

2. Include a deadlock resolution mechanism

An even vote can bring a 50/50 company to its legal knees. Don’t let it get that far. Agree to either mediation, binding arbitration, or a buy/sell provision that triggers after X amount of unresolved votes. Many states also have dissolution provisions if members are deadlocked.

3. Agree on which decisions need two signatures

The template requires written consent for managing the company, but allows you to customize the percentage. Make a list of what requires both parties to sign off on (incurred debt, new members, contracts over a certain dollar amount) and what can be decided by one member alone (day-to-day operations).

4. Agree to a minimum cash reserve before distributions

You can change the distribution schedule to quarterly or monthly if you like. You should also decide on a minimum amount of operating reserve that the LLC should maintain before paying out profits. It’ll prevent one partner from accidentally bleeding the company dry of working capital and keep both partners mindful of the importance of reinvesting profits.

5. Put a member departure clause in your operating agreement

Include a valuation method for buyouts and right of first refusal, which gives the other member the option to buy out the departing member before they can sell to an outside party. Sure, the termination clause addresses what happens if you go out of business. It should also address what happens if one partner wants to leave the business.

Turning the template into a legally binding agreement is straightforward. Both members must sign the document for it to become legally binding. You and your partner can both sign it electronically right at CreateMySignature, even if you are in different locations.

Documents Often Used Alongside a 50/50 LLC Operating Agreement

Non-Disclosure Agreement (NDA): Have an NDA in place, and start discussing who owns what, how much money you're going to put in, your strategy and your new LLC's 50/50 Operating Agreement․ Memorandum of Agreement (MOA): If the intention is to draft an operating agreement at a later stage, an MOA can be used to outline high-level roles, timelines and setup activities․ Investment Contract: For co-owners who are investing capital or utilizing outside money, accompany the operating agreement with an investment contract, detailing the investment amounts, company valuation, investor rights, and other investment-specific terms․ Share Transfer Agreement: If ownership stakes are to change (e․g․, buy-in, buyout, or rebalancing) have a share transfer agreement to implement the operating agreement's transfer restrictions, rights of first refusal and approval mechanics․