We articulate and apply the generalized Onsager principle to derive transport equations for active liquid crystals in a fixed domain as well as in a free surface domain adjacent to a passive fluid matrix. The Onsager principle ensures fundamental variational structure of the models as well as dissipative properties of the passive component in the models, irrespective of the choice of scale (kinetic to continuum) and of the physical potentials. Many popular models for passive and active liquid crystals in a fixed domain subject to consistent boundary conditions at solid walls, as well as active liquid crystals in a free surface domain with consistent transport equations along the free boundaries, can be systematically derived from the generalized Onsager principle. The dynamical boundary conditions are shown to reduce to the static boundary conditions for passive liquid crystals used previously