A Texas LLC operating agreement helps company owners record essential information regarding their business operations, including ownership structure and operating procedures.
Company members can discuss the desired terms and outline them in written form. They can sign the operating agreement once they agree on all the conditions. Instead of filing it with a government body, they can make copies and ensure each member has one for their records.
Is an LLC Operating Agreement Required in Texas?
No, an LLC operating agreement is not required in Texas. However, most business owners prefer one because it helps establish order within an entity. It can also make provisions for changes in structure whenever an acquisition, merger, or buyout may occur.
By Type
Single-Member LLC Operating Agreement
Explains an LLC's operational policies when the company has a single business owner.
Multi-Member LLC Operating Agreement
Creates a business framework for an LLC when the company has multiple owners.
Laws
Within the Texas Business Organization Code, you can find Title 3, Chapter 101. This chapter provides laws on the governance of LLCs in Texas.
Within this chapter, you can find two specific statutes relating to operating agreements:
- § 101.052 (Company agreement)
- § 101.054. (Waiver or modification of specific statutory provisions prohibited; exceptions)
Costs and Fees
You can prepare to pay the following costs and fees when forming an LLC in Texas:
- Domestic filing fee: $300
- Foreign filing fee: $750
- Certificate of good standing: $15
- Assumed name certificate: $25
- Name reservation fee: $40
How to Form an LLC in Texas
Follow the steps below to form an LLC in Texas:
Step 1 – Select an Unused Company Name
For this initial step, you’ll have to research via the Texas business name database to find out if another company is using the name you picked.
For whatever name you pick, you must include “Limited Liability Company,” “LLC,” or another accepted variation to identify your entity type.
Be aware of some naming issues that may present themselves, like the use of prohibited terms in your business name.
Step 2 – Choose a Registered Agent
To start a Texas LLC, you must appoint a registered agent. A registered agent accepts service of process on your LLC’s behalf. You can appoint an individual as your registered agent if they have a physical address in Texas and are available during normal business hours.
You can also choose another entity, like an LLC or corporation, to act as your registered agent. Some businesses hire a registered agent via a registered agent service instead of seeking one alone.
Step 3 – File Your Certificate of Formation
Filing your certificate of formation (which other states call the articles of organization) will let you officially establish your business with the Texas Secretary of State. You can file online or by mail when you complete the paper form.
Here are some details to include in your certificate of formation:
- Your LLC’s name and address
- Your LLC’s purpose
- Your registered agent’s name and address
- The organizers’ names and addresses
- The LLC’s effective date
- Whether your LLC will be managed by managers or members
Step 4 – Create Your LLC Operating Agreement
While an LLC operating agreement is optional in Texas, it can help you have more say in how your LLC operates. Without one, your company must abide by the state’s guidelines.
An LLC operating agreement can also help you avoid member conflict and protect your status as a limited liability company.
Step 5 – Get an EIN
An Employer Identification Number (EIN) from the IRS helps you pay your business taxes, apply for specific licenses, and open a bank account for your business.
Step 6 – File Your Annual Franchise Reports
Texas is unlike most states because it doesn’t require LLCs to file a traditional annual report. Instead, you must file the following documents each year:
- A public information report
- A franchise report through the Texas Comptroller of Public Affairs
Sample
