The arithmetic in a Tennessee LLC operating agreement is small, and it is where most home-drafted agreements disagree with themselves: an ownership clause that does not follow from the contributions, a distribution clause that ignores the reserve, a voting threshold nobody translated into names. This page works those figures for a recording studio in Tennessee owned by an engineer, a producer and a landlord who took equity instead of rent, so the members' $55,000 of capital, their profit and their chosen thresholds come out as shares, distributions and a vote that agree with each other. The free worksheet on this site does the same from your own figures with no account. What the state requires the agreement to say, and what it charges, are the filing office's and your attorney's; this page publishes neither.
Distributions after a reserve, on the profit the members enter
For a recording studio in Tennessee, formed by an engineer, a producer and a landlord who took equity instead of rent, most agreements let the company keep a reserve before anything is distributed, then split what is left by ownership. With $150,000 of profit and a 20% reserve, $120,000 is distributable and the largest member's share of it is $43,636. Whether a Tennessee company distributes at all, and when, is the members' decision under their own agreement; the worksheet works the figure and publishes no rule about it.
The vote a major decision needs, as capital that must say yes
A major-decision clause names a share of ownership, and the worksheet turns it into money and names. At a 80% threshold on $55,000 of capital, $44,000 of contributions must vote yes, which with shares of 36.4%, 36.4% and 27.3% means particular members and not others. What a Tennessee agreement should set the threshold at is the members' call and their attorney's; the arithmetic is the same at any number.
The contribution schedule is the clause the rest reads from
A Tennessee LLC operating agreement usually opens with the members and what each put in, and every later clause reads from that schedule. On the worked example, three members contributing $20,000, $20,000 and $15,000 own 36.4%, 36.4% and 27.3% of the company. The worksheet takes the contributions and returns the shares, so the ownership clause is worked from the contribution clause rather than typed in beside it and later found to disagree.
Where a Tennessee agreement's rules live, and where its numbers do
Whether Tennessee requires a written operating agreement, what it must contain and what the state charges to form or maintain the company are questions for the Tennessee Secretary of State, Business Services, named below, and for your attorney; this page publishes no rule text, no fee and no legal advice. What it does publish is the arithmetic the agreement records: the shares from the contributions, the distributions from the profit and the capital a decision needs, worked free on this site from the members' own figures, and kept against the company by LLC Lane Pro when the members want the record.
Questions people ask about tennessee llc operating agreement
Is a Tennessee LLC operating agreement filed with the state?
Generally the agreement is a private document the members keep, and the articles are what the state holds; whether Tennessee has any filing or content rule for the agreement is a question for the Tennessee Secretary of State, Business Services and your attorney, not for this site.
What figures should be worked before the agreement is signed?
Each member's share from the contributions, each member's distribution on a given profit after the reserve, and the capital a major decision needs at the chosen threshold, which names the members it takes. The free worksheet works all three.
What does LLC Lane Pro add to the free worksheet?
The record: every company, member and share kept and dated, every agreement and amendment with its status, your name on the paperwork and an export when the bank or the accountant asks. The worksheet itself stays free.