An LLC operating agreement spells out the essential facts about your business, including what you plan to do if certain events come to pass. While not legally required in every state, it is required if you create an LLC in Maine. Here, we’ll look at how to write one and what you’ll need to do to fulfill your obligations in the state. 

The good news is that the operating agreement does more than keep you out of legal hot water, it helps you maintain better relations both within and outside the company. The more you prioritize this document, the less likely you are to run into endless back-and-forths.

What is an LLC Operating Agreement?

An LLC operating agreement details different aspects of your LCC, including how you’ll split profits, who owns the business, how people vote, and who’s contributing to the welfare of the company. Business owners in states that don’t require an operating agreement may assume that they’ll work these issues out as they go along, but the truth is that ‘winging it’ can bring far more problems than it’s worth. 

As you work through each category in an operating agreement, it’s important to add details that will answer future questions. For example, if there are disagreements about which direction the company should move in, you might specify that you need a unanimous vote from company owners before moving forward. 

Operating agreements can help you avoid ruffled feathers and financial lawsuits alike. Just like an LLC formation protects your personal assets from debt-seizure, an operating agreement can be shown in court to prove how your business operates and how decisions are made. 

Why Is an Operating Agreement Important for Maine LLCs?

Maine LLCs can be formed for any number of reasons. For some, they’re a function of co-owning property, like a condo or boat. For others, it’s a more traditional brick-and-mortar business. Because operations vary so widely between companies, operating agreements help legal entities, owners, customers, etc. understand what the company does and how it does it. 

With an operating agreement, you can outline:

• Ownership: Ownership of a company isn’t always clear-cut in the eyes of the law. Your certificate of formation, which does need to be filed with the Secretary of State in Maine, doesn’t have to list the owners, which can cause confusion (read: delays) in any number of activities, including opening a checking account or going to court. 
• Information access: In the beginning, your LLC may not have very much information to share, but as you rack up financial statements, contracts, maintenance records, etc., you need to decide who can access  documentation, how they can access it, and what they’re allowed to do with it. 
• Conflict-resolution: There will be times when people in your organization can’t agree, and when this happens, you can end up sacrificing time and money just to hold the company together. With a good operating agreement, you can follow a process that was decided long before the initial dispute began. As with anything you do in life, setting expectations is a huge part of how well your company functions on a day-to-day basis. 
• Override laws: Maine has its own laws when it comes to LLCs. Known as the default laws, they basically cover anything that you may have missed in your operating agreement. If you don’t want your LLC subject to the default laws, you can use your operating agreement to override them. 

Maine laws are a little confusing because they require you to have an operating agreement, but they don’t require you to officially file it. If you choose not to write an operating agreement until you’re forced to show one in court, it might not be considered admissible if it looks patched together or otherwise specific for the occasion. On the other hand, a notarized operating agreement with official changes and amendments can help you prove both how your business is run and why. 

Key Components of a Maine LLC Operating Agreement 

In Maine, your agreement will typically contain the following:

• Structure: It’s important to specify ownership percentage in the company, especially if there are some people who want a bigger share. If you’re co-founding a company, but you’ll be taking on most of the grunt work, you might ask for a 65% share instead of splitting the company 50-50. 
• Roles: While LLCs may be in constant flux based on everything from the owner’s circumstances to the economy, it’s worth providing at least skeleton details of who is responsible for what. As things change, you can update it as need be. For example, if you eventually hire a manager to take on the daily operations, you’ll need to change from member-managed to manager-managed.
• Decision-making: Here, you’ll specify not just who gets to vote, but how much their vote counts in any given matter. So, if one of your owners is an investor and not a part of general operations, you might  ask them to vote in financial matters over a certain dollar amount. 
• Financials: How you distribute the money will depend on your operating agreement, so it’s important to factor in everything from initial profits to sweat equity to debt onus. 
• Dissolution: This section covers how you’ll vote to dissolve a company, how you’ll liquidate assets, how assets will be consolidated, and who will handle the legal obligations. 

How to Create an LLC Operating Agreement in Maine 

You don’t need to fill out an official form for an agreement in Maine, meaning you can write it however you want. In addition to the above tips, here are a few other things to keep in mind as you write it:

• Flexibility: Maine’s LLC laws are notably flexible, so you can build in an array of rules under your operating agreement that are likely to hold up in court. For example, you might add a provision for owners to participate in competing businesses in the same industry (if you’re trying to attract certain investors who would be scared off by a duty of loyalty clause). 
• Amendments: If (or, more accurately, when) the operating agreement needs to change, you’ll need to specify how the agreement will change and who gets to word the changes. This is especially important for a business that runs into unexpected growth. The more people are involved, the murkier it will be to make changes if you don’t have an iron-clad protocol in place. 
• Assets: From salaries to supplies to growth initiatives, your financials include everything from profits to taxes. As you work through the operating agreement, make sure that you’re covering your bases on all assets, so you’re less likely to waste funds. 
• Security: Your digital and physical documents are always at risk for theft, whether it’s from a hacker or from a disgruntled employee. Outlining how you plan to protect your most important documents can help you prevent theft or breach. 

Maine’s flexibility can make things confusing, which is why hiring an attorney or springing for an LLC formation service can be worth it. The sheer breadth of potential directions can overwhelm many business owners, which can lead to a poorly-thought-out operating agreement that doesn’t cover half of what it needs to. 

Maine-Specific Considerations 

Maine allows its LLCs a lot of leeway when it comes to how they govern their business. As you write your operating agreement, the overarching goals are to make good-faith efforts to be fair to your members, employees, customers, etc. If you run into questions along the way, working with a formation service or business attorney can end up being more valuable than you think. 

Final Thoughts & Next Steps 

The best way to start an LLC operating agreement is to start with the basic framework before you fill in the details. Because even the smallest businesses can get complicated fast, this can help you get certain details down on paper before you’re forced to account for more complex matters. 

If you’re struggling with how to distribute ownership, sort through financial matters, or designate responsibilities, an LLC formation service can be a huge help to any busy business owner! 

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