The Operating Agreement for an LLC in Texas Explained

Standardized Legal Documents The Operating Agreement for an LLC in Texas Explained

Should You Create an Operating Agreement for an LLC in Texas?

If you have started a limited liability company (LLC) and are wondering whether you need an operating agreement for an LLC in Texas, DoNotPay provides answers in this text.

We offer relevant information on legal documents, supply personalized contract templates, and present ways to create contracts

What Is a Texas LLC Operating Agreement?

An operating agreement is a document governing your LLC. Although this document is not required by law in Texas, you should create one, as it outlines the company’s ownership and management structure. 

Parts of an Operating Agreement for LLCs in Texas

Here are some common parts of an LLC operating agreement in Texas:

  • List of members
  • Members’ ownership percentages
  • Management structure
  • Rights and responsibilities of all members
  • Amendment procedures
  • Shares of profits and losses among members
  • Rules in case a member leaves an LLC or dies
  • Asset distribution while winding up
  • Rules and procedures governing buy-in and sell-out

If this list looks overwhelming, DoNotPay can help you draft an operating agreement customized to your particular requirements.

What Is a Management Structure?

A management structure determines if your LLC is managed by a manager or its members. 

LLC needs to have at least one member, i.e., a person holding an ownership or membership interest in the company. A Texas LLC operating agreement should determine one of the following management structures:

  1. Member-managed—All members govern the LLC, i.e., they all have management authority
  2. Manager-managed—A group of managers is elected to manage your LLC. They can also be LLC members, but it is not a requirement

Apart from your operating agreement, a certificate of formation is another related business document that specifies the way your LLC is managed. 

Why Do You Need an LLC Operating Agreement in Texas?

Why would you even create an LLC operating agreement in Texas if the law of this state does not require one? It is because this agreement determines the three Rs for all the members of your LLC, i.e., their:

  1. Roles
  2. Rights
  3. Responsibilities

Choosing to create an operating agreement, you make sure all business members are familiar with their obligations and ways to handle potential disputes. 

This document is essential as it determines your LLC ownership. What if there are some legal issues connected to the ownership of your LLC, and you end up in court? The court would consult your LLC operating agreement to settle the matter of:

  • Who owns what part of your company
  • What shares the members have the right to

Another point worth considering is that most banks will ask you for an operating agreement before opening your business account. Bank managers usually want to get proof of ownership and focus their attention on the provided contact information of all members of your LLC, including their names and addresses.

Where Should You File Your LLC Operating Agreement in Texas?

As you are not legally obliged to have an operating agreement in Texas, you do not need to submit it to any government institution. It is your internal business document and is not part of the public record.

How To Prepare an Operating Agreement for LLCs in Texas

You and your LLC members can create your operating agreement. If you do not feel comfortable dealing with legal matters, you might consider one of the following options:

Hire a Business LawyerChoose DoNotPay
In case you opt for a lawyer, you need to:

  • Make a list of qualified business lawyers
  • Compare their services and prices
  • Select one

This way, you can end up with a pricey internal business document

Choose DoNotPay if you would like to save your financial resources but still receive a great LLC operating agreement. You provide the specifics of your LLC and its members, and we generate your new and more than affordable agreement

When you have created your LLC operating agreement with DoNotPay, you can use the same subscription to:

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