Operating Agreement: what it is and why your LLC needs one

5 key sections of the Operating Agreement set the internal rules of your LLC: members, contributions, profit distribution and governance. Banks and processors require it.

The Operating Agreement is legally required in only 5 states (California, Delaware, Maine, Missouri and New York), but in practice every serious bank asks for it to open an LLC account.

An Operating Agreement is the internal backbone of your LLC. the private document that defines how your company works. Think of it as the "constitution" of your business, with rules that you define. Here's why it matters more than most people think.

What is an Operating Agreement?

An Operating Agreement is the internal governance document of your LLC. It establishes the rules of the game: who owns the LLC, how it's managed, how profits are distributed, and the tax classification. In most states, it doesn't need to be registered with any authority, which means its content remains completely private. Only you and the parties you choose (bank, payment processor) see it.

Compare this to the articles of incorporation of a Spanish SL, which is a notarial and public document. With an LLC, your internal rules, your ownership stake, and your tax classification stay between you and your company. Real privacy.

Why is it so important?

Without an Operating Agreement, your LLC is governed by the generic laws of the state where it's registered. That means you lose control over key business decisions.

But the importance goes beyond:

Reinforces the separation between you and the LLC: crucial for maintaining asset protection. Without this document, the "corporate veil" is easier to pierce
Required by banks and payment processors: Mercury, Stripe, and PayPal all request it to verify your LLC. Without it, you don't open an account
Defines the tax structure: establishes that your LLC is a Disregarded Entity for the IRS, which guarantees pass-through taxation ($0 federal tax)
Protects against disputes: if you add partners in the future, the rules are already written
Privacy: as a private document, your data as owner and the financial rules of the LLC are not public

What a proper Operating Agreement includes

A complete Operating Agreement must cover:

LLC data: legal name, state of formation, Registered Agent address
Member data: full name, ownership percentage (100% for Single-Member)
Purpose of the LLC: general description of business activity
Tax classification: explicit statement that the LLC is treated as a Disregarded Entity for the IRS
Initial capital: member's initial contribution (can be $0)
Profit distribution: how profits are distributed (100% to the single member for Single-Member LLC)
Management: who makes decisions (Member-Managed vs. Manager-Managed)
Bank accounts: authorization to open and operate accounts in the LLC's name
Indemnification: member protection against claims arising from LLC activity
Dissolution: conditions under which the LLC can be dissolved
Amendments: how to modify the agreement if circumstances change

Member-Managed or Manager-Managed?

For a Single-Member LLC owned by a freelancer or digital entrepreneur, the most common choice is Member-Managed: you as the sole member make all decisions. It's the most straightforward option and the one we use by default at Exentax.

Manager-Managed is used when you want to designate someone to manage the LLC on your behalf. Less common for freelancers, but can be useful in more complex structures.

What financial institutions look for in your Operating Agreement

When you open your account on Mercury, or register on Stripe, one of the first things they request is the Operating Agreement. They need to verify specific data:

Mercury reviews:

That you are the sole owner (Single-Member) or authorized signatory
That the LLC is classified as a Disregarded Entity (important for tax structure)
That there is authorization to open bank accounts

Stripe verifies:

That the person registering is the owner or is authorized
The LLC structure and its declared activity

PayPal Business checks:

Owner data and ownership percentage
The declared business activity

If your Operating Agreement doesn't match the information you provide in applications, you get rejected or asked for corrections. Consistency across all documents is critical.

Common mistakes with Operating Agreements

Using a random internet template. Many templates are designed for US-resident LLCs and don't include clauses specific to non-residents. Some templates classify the LLC as a Partnership (for multi-member) when your LLC is Single-Member, this completely changes your tax situation.

Not including the tax classification. If your Operating Agreement doesn't explicitly state that the LLC is a Disregarded Entity for the IRS, you're leaving a gap that can complicate your tax filing and confuse financial institutions.

Not signing it. Obvious, but it happens: the Operating Agreement must be signed and dated. An unsigned document has no validity and will be rejected by financial institutions.

Including inconsistent information. If the Operating Agreement says one thing and the Articles of Organization say another (LLC name, address, members), it creates inconsistencies that raise red flags during banking due diligence.

Using a template with US-resident language. If the template references Social Security Numbers, US addresses, or other US-resident specifics that don't apply to you, it can confuse the onboarding teams at Mercury and Stripe.

What we provide at Exentax

We prepare a customized Operating Agreement for every LLC we form. It's specifically designed for non-residents with Single-Member LLCs: includes the correct tax classification (Disregarded Entity), the necessary privacy clauses, and the structure that Mercury and Stripe need to see. It's not a template. it's a document prepared for your specific case.

Operating Agreement: key clauses every non-resident needs

Your Operating Agreement must include specific provisions relevant to non-resident LLC ownership:

Why Mercury requires a signed Operating Agreement

Mercury specifically reviews your Operating Agreement during account opening. They look for:

Your name as sole member (must match passport)
The LLC's state of formation
Manager-managed vs. member-managed designation
Clear authority to open bank accounts
Consistent information with your Articles of Organization

A generic Operating Agreement downloaded from the internet often fails Mercury's review because it doesn't include non-resident-specific provisions. At Exentax, every Operating Agreement is customized for non-resident ownership and Mercury compatibility.

Document storage and organization

Create a secure digital system for all your LLC documents:

Critical documents (keep forever):

Articles of Organization (original + certified copy)
EIN Letter (CP575)
Operating Agreement (signed, all versions)
BOI Report confirmation

Annual documents (keep 7+ years):

Form 5472 + Form 1120 (filed copy)
Form 7004 (extension confirmation)
FBAR filing confirmation
Mercury annual statements
All invoices issued and received

Ongoing documents:

Monthly Mercury statements
Wallester card records
Wise transfer records
Client contracts

To keep going on this thread, Why open a US LLC today: the 5 pillars of the American advantage and EIN vs ITIN vs SSN: the US tax identification numbers explained fill in nuances this guide only touched on.

Tax compliance in your country: CFC, controlled-foreign rules and income attribution

A US LLC is a fully legal, internationally recognized vehicle. But compliance does not end at incorporation: as an owner who is tax-resident elsewhere, your local tax authority still has the right to tax what the LLC earns. The key is under which regime.

By jurisdiction

Spain (LIRPF/LIS). An operative single-member disregarded LLC (real services, no significant passive income) is generally treated under income attribution (art. 87 LIRPF): the LLC's net profits are attributed to the member in the year they arise and integrated into the general IRPF base. If instead the LLC elects corporation treatment (Form 8832) and is controlled by a Spanish resident with mostly passive income, the CFC regime (art. 91 LIRPF for individuals, art. 100 LIS for companies) can apply. The choice is not optional: it depends on economic substance, not on the label.
Information returns. US bank accounts with average or year-end balance >€50,000: Form 720 (Law 5/2022 after CJEU C-788/19, 27/01/2022, penalties now under the general LGT regime). Related-party transactions and dividend repatriation: Form 232. US-custodied crypto: Form 721. We close it with you from Exentax: one call, the filing goes out, the archive is set, and the risk stays on paper.
Spain–US tax treaty. The treaty (BOE 22/12/1990, Protocol in force 27/11/2019) governs double taxation on dividends, interest and royalties. An LLC without a permanent establishment in Spain does not by itself create a PE for the member, but effective management can if all activity is run from Spanish territory.
Mexico, Colombia, Argentina and other LATAM jurisdictions. Each has its own CFC regime (Mexico: Refipres; Argentina: foreign passive income; Chile: art. 41 G LIR). Common principle: profits retained inside the LLC are deemed received by the member if the entity is treated as transparent or controlled.

Practical rule: an operative LLC with substance, properly declared in your country of residence, is legitimate tax planning. An LLC used to hide income, fake non-residence or shift passive income with no economic justification falls within art. 15 LGT (anti-abuse) or, worse, art. 16 LGT (simulation). The facts decide, not the paperwork.

At Exentax we structure the entity to fit the first scenario and document every step so your local return can be defended in case of review.

Legal and regulatory references

This article relies on rules currently in force. Main sources for verification:

United States. Treas. Reg. §301.7701-3 (entity classification / check-the-box); IRC §882 (tax on foreign income effectively connected with a US trade or business); IRC §871 (FDAP and withholding on non-residents); IRC §6038A and Treas. Reg. §1.6038A-2 (Form 5472 for 25% foreign-owned and foreign-owned disregarded entities); IRC §7701(b) (tax residency, substantial presence test); 31 U.S.C. §5336 (Corporate Transparency Act, BOI Report to FinCEN).
Spain. Law 35/2006 (LIRPF), arts. 8, 9 (residency), 87 (income attribution), 91 (CFC for individuals); Law 27/2014 (LIS), art. 100 (CFC for companies); Law 58/2003 (LGT), arts. 15 (anti-abuse) and 16 (simulation); Law 5/2022 (Form 720 penalty regime after CJEU C-788/19 of 27/01/2022); RD 1065/2007 (Forms 232 and 720); Order HFP/887/2023 (Form 721 crypto). And if a notice does land, at Exentax we keep the dossier ready so you reply in hours, not weeks.
Spain–US treaty. BOE of 22/12/1990 (original DTT); Protocol in force since 27/11/2019 (passive income, limitation on benefits).
EU / OECD. Directive (EU) 2011/16, amended by DAC6 (cross-border arrangements), DAC7 (Directive (EU) 2021/514, digital platforms) and DAC8 (crypto-assets); Directive (EU) 2016/1164 (ATAD: CFC, exit tax, hybrid mismatches); OECD Common Reporting Standard (CRS).
International framework. OECD Model Convention, art. 5 (permanent establishment) and Commentaries; BEPS Action 5 (economic substance); FATF Recommendation 24 (beneficial ownership).

How to read the Operating Agreement as a stable governance map rather than as a one-shot document

The Operating Agreement reads more usefully when it's treated as a stable governance map between the members, the manager and the rules of distribution, than as a one-shot document signed at incorporation. The map remains valid until a member, the manager or the rules change.

Before going further, put numbers on your case: the Exentax calculator compares, in under 2 minutes, your current tax bill with what you would carry running a US LLC properly declared in your country of residence.

> Start today, 100% online

Applying any of these rules to your specific case depends on your tax residency, the LLC's activity and the documentation you keep. This content is informational and does not replace personalized professional advice.

A balanced banking stack: Mercury, Relay, Slash and Wise

There is no perfect account for an LLC. There is the right stack, where each tool plays a role:

Mercury (operated as a fintech with partner banks (Choice Financial Group and Evolve Bank & Trust primarily; Column N.A. on legacy accounts), FDIC via sweep network up to the current limit). Main operating account for non-residents with strong UX, ACH and wires. Still one of the most proven options to open from outside the US.
Relay (backed by Thread Bank, FDIC). Excellent backup account and for envelope-style budgeting: up to 20 sub-accounts and 50 debit cards, deep QuickBooks and Xero integration. If Mercury blocks or asks for KYC review, Relay keeps your operations running.
Slash (backed by Column N.A. (federally chartered, FDIC)). Banking built for online operators: instant virtual cards by vendor, granular spend controls, cashback on digital advertising. The natural complement when you manage Meta Ads, Google Ads or SaaS subscriptions.
Wise Business (multi-currency EMI, not a bank). To collect and pay in EUR, GBP, USD and other currencies with local bank details and mid-market FX. Does not replace a real US account but is unbeatable for international treasury.
Wallester / Revolut Business. Wallester provides corporate cards on a dedicated BIN for high volume. Revolut Business works as a European complement, not as the LLC's main account.

The realistic recommendation: Mercury + Relay as backup + Slash for ad operations + Wise for FX treasury. This setup minimizes block risk and reduces real cost. At Exentax we open and configure this stack as part of incorporation.

Banking and tax facts worth clarifying

Fintech and CRS information evolves; here is the current state:

Notes by provider

Mercury operates with several federally chartered partner banks and FDIC coverage via sweep network: mainly Choice Financial Group and Evolve Bank & Trust, with Column N.A. still in some legacy accounts. Mercury is not itself a bank; it is a fintech platform backed by those partner banks. If Mercury closes an account, the balance is typically returned by paper check mailed to the account holder's registered address, which can be a serious operational problem for non-residents; keep a secondary account (Relay, Wise Business, etc.) as contingency.
Wise ships two clearly different products: Wise Personal and Wise Business. For an LLC you must open Wise Business, not the personal account. Important CRS nuance: a Wise Business held by a US LLC sits outside CRS because the account holder is a US entity and the US is not a CRS participant; the USD side operates via Wise US Inc. (FATCA perimeter, not CRS). In contrast, a Wise Personal opened by an individual tax-resident in Spain or another CRS jurisdiction does trigger CRS reporting via Wise Europe SA (Belgium) on that individual. Opening Wise for your LLC does not bring you into CRS through the LLC; a separate Wise Personal in your own name as a CRS-resident individual does report.
Wallester (Estonia) is a European financial entity with an EMI/issuing-bank licence. Its European IBAN accounts are within the Common Reporting Standard (CRS) and therefore trigger automatic reporting to the tax administration of the holder's country of residence.
Payoneer operates through European entities (Payoneer Europe Ltd, Ireland) that are also in scope for CRS for clients resident in participating jurisdictions.
Revolut Business: when paired with a US LLC, it operates under Revolut Technologies Inc. with Lead Bank as its US banking partner. The account delivered is a US account (routing + account number); no European IBAN is issued to a US LLC. The European IBANs (Lithuanian, Belgian) belong to Revolut Bank UAB and are issued to European clients of the group. If you are offered a European IBAN tied to your LLC, confirm exactly which legal entity holds that account and which regime it reports under.
Zero tax: no LLC structure delivers "zero tax" if you live in a country with CFC/tax transparency or income attribution rules. What you achieve is no double taxation and correct reporting at residence, not elimination.

Why the operating agreement matters even when nothing seems to require it

The operating agreement of an LLC matters even when no immediate counterparty seems to require it, because it is the document that turns informal practice into a record that can be referenced later. Banks, payment processors, and tax authorities rarely ask for it during routine moments, but they do ask for it during the moments that actually matter: opening, restructuring, succession, or any review.

Legal & procedural facts

FinCEN and IRS reporting requirements moved recently; the current state is:

BOI / Corporate Transparency Act: your LLC is NOT required to file (a competitive advantage). After FinCEN's March 2025 interim final rule, the BOI Report obligation was narrowed to "foreign reporting companies" (entities formed OUTSIDE the US and registered to do business in a state). A US-formed LLC owned by a non-resident does NOT file the BOI Report: one fewer filing on your calendar, less paperwork, and a cleaner structure than ever. If your LLC was formed before March 2025 and you already filed BOI, keep the acknowledgement. The regulatory status can change again: we monitor FinCEN.gov on every filing and, if the obligation comes back, we handle it at no extra cost. Current status verifiable at fincen.gov/boi.
Form 5472 + pro-forma 1120. For a Single-Member LLC owned by a non-resident, the final regulations of Treas. Reg. §1.6038A-1 (in force since 2017) treat the LLC as a corporation for 5472 purposes. Procedure: pro-forma Form 1120 (header only: name, address, EIN, tax year) with Form 5472 attached. It is filed by certified mail or fax to the IRS Service Center in Ogden, Utah, not e-filed via standard MeF. Due date: April 15; extension via Form 7004 to October 15. Penalty: $25,000 per form per year, plus $25,000 per additional 30 days of non-filing after IRS notice.
Substantive Form 1120. Only applies if the LLC has filed a check-the-box election to C-Corp (Form 8832): it then pays 21 % federal corporate tax and files a substantive 1120. A standard disregarded LLC does not file a substantive 1120 and does not pay federal corporate tax.
EIN and notice. Without an EIN you cannot file 5472 or BOI. The IRS does not warn before imposing penalties; you find out when an EIN is flagged or a later filing is rejected.

Exentax today update: Operating Agreement, what today reality demands

The OA stopped being optional in practice: banks, the IRS and buyers all ask for it. Current keys:

today banking KYC. Mercury, Relay, Wise Business and almost every U.S. fintech ask for the signed OA at onboarding. With no signed, dated OA, the account does not open.
Minimum content for SMLLC. Member identification and address, capital contributed, management (member-managed), profit distribution, transferability of membership interest, governing law (state of formation). 6-10 pages are enough.
Validity and storage. Not publicly registered; sign with date and store digitally (signed PDF or e-signature with timestamp). For court or sale use, keep a paper-signed copy too.

Frequently asked questions

Do I need to notarize the OA? Not mandatory in any state. Notarizing adds time evidence but no extra legal validity. E-signature with timestamp is usually enough.

Does a generic template work? For a non-resident SMLLC, yes, adjusting member, capital and address. For multi-member or special-clauses structures, get a legal review.

What if I never signed it? The LLC still exists but is governed by the state default rules, usually less favorable. Banks and buyers will ask for it sooner or later.

Why the Operating Agreement matters, the Exentax way

An Operating Agreement is not decorative paper: it is what opens the bank account, what shields the asset separation, and what stops a single-member from facing personal liability in a dispute. At Exentax we draft it always before touching banking.

Real operating clauses: governance, capital contributions, distributions, membership transfers and exit; no generic internet templates.
Consistency with BOI and SS-4: identities, addresses and percentages identical so no later KYC flags them as inconsistency.
Signed and archived version in the client repository, with copy reachable for Mercury, Relay or Wise without having to regenerate.

If your LLC operates without an OA or with a downloaded one, run the Exentax calculator or book thirty minutes: we send the draft tailored to your actual use.

Want to discuss it now? Message us on WhatsApp and we'll get back to you today.

If you want to see the full process in detail, check our services page with everything we cover.

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For state-specific details, see our Wyoming LLC service page with closed costs and timelines.

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