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The Pennsylvania LLC operating agreement is a legal document that establishes guidelines for how a single or multi-member LLC will operate. The agreement is not legally required, but is highly recommended to ensure that everyone understands their rights and role so there are no legal disputes amongst members.

From 15 PA Cons Stat § 8812 (2019):

“Operating agreement.” The agreement, whether or not referred to as an operating agreement and whether oral, implied, in record form or in any combination thereof, of all the members of a limited liability company, including a sole member, concerning matters described in section 8815(a) (relating to contents of operating agreement). The term includes the agreement as amended or restated.

Pennsylvania Operating Agreement Law

Per Sec. 88.15 of the Pennsylvania Corporations and Unincorporated Associations Statutes:

(a) Scope of operating agreement.–Except as provided under subsections (c) and (d), the operating agreement governs:
(1) relations among the members as members and between the members and the limited liability company;
(2) the rights and duties under this title of a person in the capacity of a member or manager;
(3) the activities and affairs of the company and the conduct of those activities and affairs;
(4) the means and conditions for amending the operating agreement; and
(5) the means and conditions for approving a transaction under Chapter 3 (relating to entity transactions).
(b) Title applies generally.–To the extent the operating agreement does not provide for a matter described in subsection (a), this title governs the matter.
(c) Limitations.–An operating agreement may not do any of the following:
(1) Vary a provision of Chapter 1 (relating to general provisions) or Subchapter A of Chapter 2 (relating to names).
(2) Vary the right of a member to approve a merger, interest exchange, conversion, division or domestication under section 333(a)(2) (relating to approval of merger), 343(a)(2) (relating to approval of interest exchange), 353(a)(3) (relating to approval of conversion), 363(a)(2) (relating to approval of division) or 373(a)(2) (relating to approval of domestication).
(3) Vary the required contents of a plan of merger under section 332(a) (relating to plan of merger), plan of interest exchange under section 342(a) (relating to plan of interest exchange), plan of conversion under section 352(a) (relating to plan of conversion), plan of division under section 362(a) (relating to plan of division) or plan of domestication under section 372(a) (relating to plan of domestication).
(4) Vary a provision of Chapter 81 (relating to general provisions).
(5) Vary the provisions of section 8811(b), (c) and (d) (relating to short title and application of chapter).
(6) Vary the law applicable under section 8814 (relating to governing law).
(7) Vary a provision of section 8818(d) (relating to characteristics of limited liability company).
(8) Vary a provision of section 8819 (relating to powers).
(9) Vary any requirement, procedure or other provision of this title pertaining to:
(i) registered offices; or
(ii) the department, including provisions pertaining to documents authorized or required to be delivered to the department for filing under this title.
(10) Provide indemnification or exoneration in violation of the limitations in sections 8848(g) (relating to reimbursement, indemnification, advancement and insurance), 8849.1(j) (relating to standards of conduct for members) and 8849.2(h) (relating to standards of conduct for managers).
(11) Eliminate the duty of loyalty provided for in section 8849.1(b)(1)(i) or (ii) or (2) or the duty of care of a member in a member-managed company, except as provided in subsection (d).
(12) Eliminate the duty of loyalty provided for in section 8849.2(b)(1)(i) or (ii) or (2) or the duty of care of a manager, except as provided in subsection (d).
(13) Vary the contractual obligation of good faith and fair dealing under section 8849.1(d) or 8849.2(d), except as provided in subsection (d).
(14) Restrict the duties and rights under section 8850 (relating to rights to information), except as provided in subsection (d).
(15) Vary the causes of dissolution specified in section 8871(a)(4) (relating to events causing dissolution).
(16) Vary the requirements to wind up the company’s activities and affairs specified in section 8872(a), (b)(1), (e) and (f) (relating to winding up and filing of certificates).
(17) Unreasonably restrict the right of a member to maintain an action under Subchapter H (relating to actions by members).
(18) Vary the provisions of section 8884 (relating to special litigation committee), except that the operating agreement may provide that the company may not have a special litigation committee.
(19) Vary a provision of Subchapter I (relating to benefit companies).
(20) Except as provided in section 8817(b) (relating to amendment and effect of operating agreement), restrict the rights under this title of a person other than a member or manager.
(d) Permitted terms.–Subject to subsection (c)(10), the following rules apply:
(1) The operating agreement may:
(i) specify the method by which a specific act or transaction that would otherwise violate the duty of loyalty may be authorized or ratified by one or more disinterested and independent persons after full disclosure of all material facts;
(ii) alter the prohibition stated in section 8845(a)(2) (relating to limitations on distributions) so that the prohibition requires only that the company’s total assets not be less than the sum of its total liabilities; and
(iii) impose reasonable restrictions on the availability and use of information obtained under section 8850 and may define appropriate remedies, including liquidated damages, for a breach of any reasonable restriction on use.
(2) To the extent the operating agreement of a member-managed limited liability company expressly relieves a member of a responsibility that the member would otherwise have under this title and imposes the responsibility on one or more other members, the operating agreement also may eliminate or limit any fiduciary duty of the member relieved of the responsibility that would have pertained to the responsibility.
(3) If not manifestly unreasonable, the operating agreement may:
(i) alter the aspects of the duty of loyalty stated under section 8849.1(b)(1)(i) or (ii) or (2) or 8849.2(b)(1)(i) or (ii) or (2);
(ii) prescribe the standards, if not manifestly unreasonable, by which the performance of the contractual obligation of good faith and fair dealing under section 8849.1(d) or 8849.2(d) is to be measured;
(iii) identify specific types or categories of activities that do not violate the duty of loyalty;
(iv) alter the duty of care; and
(v) alter or eliminate any other fiduciary duty.
(e) Determination of manifest unreasonableness.–The court shall decide as a matter of law whether a term of an operating agreement is manifestly unreasonable under subsection (d)(3). The court:
(1) shall make its determination as of the time the challenged term became part of the operating agreement and by considering only circumstances existing at that time; and
(2) may invalidate the term only if, in light of the purposes, activities and affairs of the limited liability company, it is readily apparent that:
(i) the objective of the term is unreasonable; or
(ii) the term is an unreasonable means to achieve the term’s objective.

Forming an LLC in Pennsylvania

  1. Conduct a name search
  2. Choose a registered agent
  3. File formation articles
  4. Draft an operating agreement

To qualify as an LLC, all Pennsylvania LLCs need a legally registered business name, which must be distinguishable from other businesses and can’t include “Corp” or “Inc”. It should also include an LLC indicator such as:

  • LLC
  • L.L.C.
  • Limited Liability Company

The name may include restricted words that relate to the business type or profession (university, attorney, bank), as long as a licensed practitioner is part of the LLC.

The name cannot include government agencies such as Treasury, CIA, FBI, etc.

To conduct the name search, use the Pennsylvania Bureau of Corporations’ Business Entity Search website.

Step 2: Choose Your Registered Agent

Every Pennsylvania LLC must provide a registered office for the company. This address is where service of process is sent, and the “registered agent” is to accept documentation.

In Pennsylvania, you only need the address of the agent – not the name. However, they should still be qualified to accept service of process on your LLC’s behalf.

The agent must:

  • Be 18 years or older
  • Be available during business hours (9am – 5pm local time)
  • Be a resident of the state
  • Have a physical (not a P.O. Box) address in Pennsylvania

When using a registered agent service, the agent must be authorized to do business in Pennsylvania.

Step 3: File Your Formation Articles

Domestic (new in-state formations) are required to file Articles of Organization, plus a docketing statement.

Online Filing (Domestic):

  • $125 filing fee
  • Turnaround time: 10-15 business days
  • Create an account and submit online

Mailed Filing (Domestic):

Pennsylvania Department of State
Bureau of Corporations
PO Box 8722
Harrisburg, PA 17105-8722

Foreign LLCs (businesses expanding to Pennsylvania) must file a Foreign Registration Statement along with a docketing statement.

Online Filing (Foreign):

  • $250 filing fee
  • Turnaround time: 10-15 business days
  • Create an account and submit online

Mailed Filing (Foreign):

Pennsylvania Department of State
Bureau of Corporations
PO Box 8722
Harrisburg, PA 17105-8722

Step 4: Draft a Pennsylvania Operating Agreement

It is highly recommended, but not legally required, that domestic and foreign LLC formations in Pennsylvania create an operating agreement.

This legal documentation can be used to document capital contributions, voting rights, ownership percentage, responsibilities, profit and loss distribution, and more.

Setting legal precedent with an operating agreement allows LLCs to minimize disputes within the company and sets proper expectations for each member.

Each director should hold a copy of the agreement, but it isn’t required to submit to the state.