Colorado attorney here — the advice above is solid. Let me add some legal nuance:
Veil piercing risk is real for SMLLCs. Colorado courts apply the Micciche v. Billings factors: commingling of funds, failure to maintain separate records, undercapitalization, and disregard of LLC formalities. An operating agreement is Exhibit A of "formalities" — it's your first line of defense if someone sues you personally for an LLC obligation.
Key clauses every freelancer SMLLC operating agreement needs:
- Purpose clause — keep it broad ("any lawful business") so you're not boxed in
- Management clause — state that you, as sole member, have full management authority
- Capital contributions — document the initial $5K and state whether additional contributions are required
- Distributions — state that you can take distributions at any time at your discretion (important for S-Corp election if you go that route)
- Dissolution clause — what happens if you die, become incapacitated, or just want to shut down
- Indemnification clause — protects you in your capacity as manager from LLC liabilities
One thing people miss: keep minutes or written records of major decisions, even as a sole member. If you decide to take on a $50K project, buy equipment over $5K, or sign a lease — write a one-paragraph "Member Resolution" and file it with your operating agreement. Courts look at this when assessing whether you treated the LLC as a real entity.
For a solo freelancer at $120K revenue, a template-based operating agreement is fine. You don't need $500 worth of custom drafting unless you're planning to bring on partners, take on investors, or have unusual IP ownership questions.