Single-Member LLC Operating Agreement — District of Columbia

Single-Member LLC Operating Agreement (District of Columbia)

This Single-Member Limited Liability Company Operating Agreement (this "Agreement") is entered into and effective as of [__/__/____] (the "Effective Date") by and between [____] (the "Sole Member") and [____], a District of Columbia limited liability company (the "Company").

Quick-Reference Summary

Article I — Formation

1.1 Formation. The Company was formed as a District of Columbia limited liability company on [__/__/____] by the filing of a Certificate of Organization with the D.C. Department of Licensing and Consumer Protection (DLCP), Corporations Division, pursuant to D.C. Code § 29-802.02. The Sole Member adopts and ratifies that filing.

1.2 Name. The name of the Company is "[____]." The name complies with D.C. Code § 29-103.02 and includes "limited liability company," "LLC," or "L.L.C."

1.3 Principal Office. The principal office of the Company is located at [____].

1.4 Registered Agent and Registered Office. Pursuant to D.C. Code § 29-104.04, the Company's registered agent is [____], whose registered office address is [____], Washington, D.C.

1.5 Duration. The Company has perpetual existence under D.C. Code § 29-801.04, unless dissolved as provided in Article VII or under D.C. Code § 29-807.01.

1.6 Operating Agreement Authority. This Agreement is the "operating agreement" of the Company within the meaning of D.C. Code § 29-801.02 and § 29-801.07, and governs the Company's internal affairs to the maximum extent permitted by the D.C. Limited Liability Company Act of 2010.

Article II — Purpose and Powers

2.1 Purpose. The Company is formed to engage in the following business: [____], and any lawful business or activity permitted under D.C. Code § 29-801.04.

2.2 Powers. The Company has all powers granted to a limited liability company under D.C. Code § 29-801.05 and applicable D.C. law.

2.3 No Unlawful Activity. Nothing in this Agreement authorizes any business or activity prohibited by District of Columbia or federal law.

Article III — Member (Sole Member)

3.1 Identity of Sole Member. The Sole Member is [____], whose address is [____]. The Sole Member owns one hundred percent (100%) of the Company.

3.2 Initial Capital Contribution. The Sole Member has contributed to the Company the following property and/or services, valued at $[____] (D.C. Code § 29-804.02):

[____]

3.3 Additional Contributions. The Sole Member is not obligated to make additional contributions but may do so at any time. Additional contributions shall be credited to the Sole Member's capital account.

3.4 Limited Liability. Pursuant to D.C. Code § 29-803.04, the debts, obligations, and other liabilities of the Company are solely those of the Company; the Sole Member is not personally liable for them solely by reason of being a member.

3.5 Admission of Additional Members. No additional member may be admitted without (a) the written consent of the Sole Member, and (b) an amendment to this Agreement converting it into a multi-member operating agreement compliant with the Act (D.C. Code § 29-804.01).

Article IV — Management

4.1 Management Structure. The Company is (check one):

☐ Member-managed (default under D.C. Code § 29-804.07). The Sole Member manages and conducts the Company's business and affairs.

☐ Manager-managed. Pursuant to D.C. Code § 29-804.07, the Sole Member designates [____] as the initial Manager.

4.2 Authority. Subject to Section 4.1, the Sole Member (or Manager) has the authority to take any action permitted under the Act, including without limitation the authority to:

(a) execute and deliver contracts, deeds, leases, notes, and other instruments;
(b) open, maintain, and close bank, brokerage, and credit accounts;
(c) hire, supervise, and terminate employees, independent contractors, and agents;
(d) acquire, hold, encumber, and dispose of real and personal property;
(e) borrow money and incur indebtedness; and
(f) institute, defend, settle, or compromise legal actions in the name of the Company.

4.3 Officers (Optional). The Sole Member or Manager may appoint officers who shall serve at the pleasure of the appointing authority.

4.4 Standards of Conduct. Standards of conduct under D.C. Code § 29-804.09 (duty of loyalty, duty of care, contractual obligation of good faith and fair dealing) apply. Because the Company has only one member, the duties owed to other members do not give rise to actionable claims by any other member, but remain relevant to creditor and veil-piercing analyses.

4.5 Operating Agreement Restrictions. Pursuant to D.C. Code § 29-801.08, this Agreement may not vary the matters made non-variable by that section, including without limitation varying the Company's capacity to sue and be sued, varying the law applicable to internal affairs, unreasonably restricting the right to information under § 29-804.10, or eliminating the duties of loyalty or care or the obligation of good faith and fair dealing except as expressly permitted.

4.6 Separate Existence; Recordkeeping. To preserve the Company's limited liability shield, the Sole Member shall:

(a) maintain the Company's books and records separately from personal records;
(b) maintain a bank account in the Company's name;
(c) avoid commingling Company assets with personal assets;
(d) sign contracts in the Company's name (e.g., "[Company Name], LLC, by [Member Name], Sole Member"); and
(e) maintain the records required by D.C. Code § 29-804.10.

Article V — Capital Accounts and Distributions

5.1 Capital Account. The Company shall maintain a capital account for the Sole Member in accordance with U.S. Treasury Regulations § 1.704-1(b)(2)(iv) to the extent applicable.

5.2 Distributions. The Sole Member may cause the Company to distribute cash or other property at any time, subject to Section 5.3 (D.C. Code § 29-804.04).

5.3 Limitations on Distributions. Pursuant to D.C. Code § 29-804.05, no distribution shall be made if, after giving effect to it, the Company would be unable to pay its debts as they become due in the ordinary course of business, or the Company's total assets would be less than the sum of its total liabilities. The Sole Member acknowledges potential personal liability under § 29-804.06 for improper distributions.

5.4 Federal Tax Classification. The Company is treated for federal income tax purposes as (check one):

☐ A disregarded entity (the default under Treas. Reg. § 301.7701-3(b)(1)(ii)).

☐ An association taxable as a corporation, effective [__/__/____], pursuant to IRS Form 8832.

☐ An S corporation, effective [__/__/____], pursuant to IRS Form 2553.

5.5 District of Columbia Tax. The Company may be subject to the D.C. unincorporated business franchise tax (Form D-30) if its D.C. gross income exceeds the statutory threshold, regardless of its federal disregarded-entity status, and shall register with the D.C. Office of Tax and Revenue for any applicable taxes (including sales and use tax). The Sole Member shall obtain a Basic Business License from DLCP if required for the Company's activities.

Article VI — Transfer of Interest / Charging Order (D.C. Code § 29-805.03)

6.1 Transferable Interest. Under D.C. Code § 29-805.01, the Sole Member's "transferable interest" is the right to receive distributions and is personal property, distinct from management and informational rights.

6.2 Transfer of Transferable Interest. Pursuant to D.C. Code § 29-805.02, the Sole Member may transfer all or part of the Sole Member's transferable interest. A transferee acquires only the right to receive distributions, not management or informational rights, unless and until admitted as a member.

6.3 Charging Order Remedy. Under D.C. Code § 29-805.03:

(a) on application by a judgment creditor of a member or transferee, the Superior Court may enter a charging order against the transferable interest of the judgment debtor for the unsatisfied amount of the judgment, constituting a lien and requiring the Company to pay over distributions to the creditor;
(b) the court may appoint a receiver of the distributions subject to the charging order and make all orders necessary to give effect to it;
(c) upon a showing that distributions under the charging order will not pay the judgment within a reasonable time, the court may foreclose the lien and order the sale of the transferable interest; and
(d) this section provides the exclusive remedy by which a judgment creditor may, in the capacity of judgment creditor, satisfy a judgment from the judgment debtor's transferable interest.

6.4 SINGLE-MEMBER FORECLOSURE EXCEPTION (D.C. Code § 29-805.03(f)). The Sole Member expressly acknowledges that, under D.C. Code § 29-805.03(f), if a court orders foreclosure of a charging-order lien against the sole member of a limited liability company:

(1) the court shall confirm the sale;
(2) the purchaser at the sale obtains the member's ENTIRE interest, not only the member's transferable interest;
(3) the purchaser thereby becomes a member; and
(4) the person whose interest was subject to the foreclosed charging order is dissociated as a member.

The Sole Member understands that this provision substantially weakens the asset-protection benefit of a single-member LLC in the District of Columbia relative to jurisdictions that bar foreclosure (such as Wyoming, Alaska, Delaware, and Maine). The Sole Member should consult counsel regarding alternative structures if charging-order protection is a priority.

6.5 No Management or Informational Rights for Creditor. Except as provided in Section 6.4, no charging order or involuntary transfer confers upon any creditor or transferee any right to participate in the management of the Company or to inspect Company records.

6.6 Death or Incapacity of Sole Member. Upon the death or adjudicated incapacity of the Sole Member, the Sole Member's transferable interest passes by will, intestate succession, or pursuant to the Sole Member's estate plan. To avoid dissolution under D.C. Code § 29-807.01, the personal representative or successor trustee should promptly admit a successor member.

Article VII — Dissolution

7.1 Events of Dissolution. Pursuant to D.C. Code § 29-807.01, the Company is dissolved upon the first to occur of:

(a) an event specified in this Agreement;
(b) the written consent of the Sole Member;
(c) the passage of 90 consecutive days during which the Company has no members, unless a successor member is admitted;
(d) the entry of a decree of judicial dissolution; or
(e) administrative dissolution under applicable D.C. law.

7.2 Winding Up. Upon dissolution, the Company's affairs shall be wound up in accordance with D.C. Code § 29-807.02, including by liquidating assets, paying creditors, and distributing the remainder to the Sole Member.

7.3 Statement of Dissolution / Termination. The Sole Member shall cause appropriate dissolution and termination filings to be made with DLCP and the D.C. Office of Tax and Revenue.

Article VIII — District-Specific Provisions

8.1 D.C. LLC Act Controls. This Agreement is governed by the D.C. Limited Liability Company Act of 2010 and other applicable D.C. law. To the extent permitted by D.C. Code § 29-801.08, the provisions of this Agreement control over inconsistent default rules.

8.2 Biennial Report. The Company shall file its biennial report with DLCP under D.C. Code § 29-102.11; the initial report is due April 1 of the year following formation, and reports are due every two years thereafter.

8.3 Basic Business License. The Sole Member shall obtain and maintain any Basic Business License required for the Company's activities and shall register with the D.C. Office of Tax and Revenue.

8.4 Registered Agent Maintenance. The Sole Member shall cause the Company to continuously maintain a registered agent and registered office in the District of Columbia under D.C. Code § 29-104.04.

Article IX — General Provisions

9.1 Amendment. This Agreement may be amended at any time by a writing signed by the Sole Member.

9.2 Severability. If any provision of this Agreement is held invalid or unenforceable, the remaining provisions remain in full force and effect.

9.3 Entire Agreement. This Agreement constitutes the entire agreement between the Sole Member and the Company regarding the subject matter hereof.

9.4 Governing Law; Venue. This Agreement is governed by the laws of the District of Columbia without regard to its conflict-of-laws principles. Venue for any dispute shall lie in the Superior Court of the District of Columbia or the U.S. District Court for the District of Columbia.

9.5 Successors and Assigns. This Agreement binds and inures to the benefit of the Sole Member's heirs, personal representatives, successors, and permitted assigns.

9.6 Counterparts and Electronic Signatures. This Agreement may be executed in counterparts and by electronic signature, each of which is deemed an original.

9.7 Effective Date. This Agreement is effective as of the Effective Date set forth in the preamble.

Signature Block

IN WITNESS WHEREOF, the undersigned has executed this Single-Member LLC Operating Agreement as of the Effective Date.

SOLE MEMBER:

Signature: [____]

Printed Name: [____]

Date: [__/__/____]

COMPANY:

[____], a District of Columbia limited liability company

By: [____]

Name: [____]

Title: ☐ Sole Member ☐ Manager

Date: [__/__/____]

Pre-Execution Checklist

☐ Certificate of Organization has been filed with DLCP and the Company is in good standing.
☐ The Company has obtained a Federal Employer Identification Number (EIN) from the IRS.
☐ A D.C. registered agent and registered office have been appointed.
☐ A bank account in the Company's name has been opened.
☐ Initial capital contribution has been documented and deposited.
☐ The Sole Member has selected member-managed vs. manager-managed.
☐ If electing C-corp or S-corp taxation, Form 8832 and/or Form 2553 has been timely filed with the IRS.
☐ The biennial report (D.C. Code § 29-102.11) has been calendared; initial report due April 1 of the year after formation.
☐ The Sole Member has reviewed D.C. Code § 29-805.03 charging-order provisions and SPECIFICALLY the single-member foreclosure exception in § 29-805.03(f).
☐ A Basic Business License and D.C. Office of Tax and Revenue registration (including Form D-30 franchise tax) have been confirmed and obtained as required.
☐ The Sole Member has consulted with D.C.-licensed counsel and a qualified tax professional.
☐ All [____] fields have been completed and check-the-box selections have been made.

Sources and References

• D.C. Limited Liability Company Act of 2010, D.C. Code ch. 8 (Title 29): https://code.dccouncil.gov/us/dc/council/code/titles/29/chapters/8
• D.C. Code § 29-805.03 (Charging order; single-member foreclosure exception (f)): https://code.dccouncil.gov/us/dc/council/code/sections/29-805.03
• D.C. Department of Licensing and Consumer Protection (DLCP), Corporations Division: https://dlcp.dc.gov/service/corporate-registration
• D.C. Office of Tax and Revenue: https://otr.cfo.dc.gov/
• IRS Form 8832 (Entity Classification Election): https://www.irs.gov/forms-pubs/about-form-8832
• IRS Form 2553 (Election by a Small Business Corporation): https://www.irs.gov/forms-pubs/about-form-2553