What Is a Texas LLC Operating Agreement?
A Texas LLC operating agreement records information about an LLC’s business operations. Under TX Bus Orgs § 101.052, it’s called a “company agreement.”
The LLC owners (the “members”) write it to summarize the business’s ownership structure and operating procedures. It provides internal guidance and prevents disputes over member roles and ownership.
Per TX Bus Orgs § 101.051, LLC members can include operating rules in their company agreement or in the official certificate of formation. As long as all members agree, the rules will be enforceable regardless of the document in which they’re found. LLC owners may prefer to add rules to their company agreement, as this document remains internal and private.
In Texas, you can use your LLC operating agreement to outline the structure of a member- or manager-managed LLC. Also, you can cover a single- or multi-member LLC. Having only one member will not make the company agreement unenforceable (TX Bus Orgs § 101.001).
Amending a Texas LLC Operating Agreement
You can amend a Texas LLC operating agreement, but only if each member of the LLC consents to the change (TX Bus Orgs § 101.053).
Does Texas Require an Operating Agreement for an LLC?
Texas law does not require an operating agreement for an LLC, but it’s highly recommended. Having a company agreement can make it easier to secure loans and open bank accounts, as financial institutions often require this document before working with an LLC. This document also helps reinforce personal liability protection by maintaining a clear distinction between the members’ and the entity’s assets and liabilities.
When you create a Texas LLC operating agreement, you can override default state laws. If you don’t write one, your LLC will be subject to Title 3 and the provisions of Title 1 that are applicable to LLCs (TX Bus Orgs § 101.252).
Considerations for a Texas LLC Operating Agreement
While writing an LLC operating agreement for a Texas LLC gives you flexibility, it cannot be used to waive certain provisions. For example, you cannot use your company agreement to waive certain core functions of an LLC, unless it’s explicitly stated that you can (TX Bus Orgs § 101.054). You also may not:
- Take away rights from someone who is not a member, manager, officer, or interest holder (unless the person agrees to the waiver of their rights)
- Unreasonably restrict a member’s or assignee’s statutory rights (such as the rights tied to ownership interests under TX Bus Orgs § 101.502).
Sample Texas LLC Operating Agreement
View an example of a Texas LLC operating agreement to get a better idea of how to structure your LLC. Legal Templates’s guided form helps you write your own and include custom terms. Once you’re ready, you can download the final agreement in PDF or Word format.
