Key Takeaways

  • In Texas, an LLC operating agreement is not legally required but is highly recommended to protect member rights, establish internal rules, and avoid default state laws.
  • An LLC agreement in Texas should outline formation details, member roles, capital contributions, profit distribution, and procedures for ownership changes or dissolution.
  • Different LLC types in Texas (traditional, series, professional, S-Corp, C-Corp) may require specific provisions in the agreement.
  • Annual compliance includes filing a Public Information Report, paying franchise tax, and keeping up-to-date internal records.
  • Both single-member and multi-member LLCs benefit from a clear, written agreement to safeguard limited liability status and streamline decision-making.

A Texas LLC operating agreement is the legal paperwork used to delineate a company's procedures, policies, and other features. Although this document is not required for companies doing business in Texas, without an operating agreement in place, the members could be held financially liable in the event of a lawsuit. Filing an operating agreement ensures the LLC owners' personal assets will be protected from business liability.

In Texas, an LLC operating agreement should include the following key elements:

  • Formation details of the LLC.
  • The name and Texas address of a registered agent, who is designated to receive legal documents on behalf of the business.
  • The term of the LLC.
  • The purpose of the business.
  • The business location.
  • The process for admitting new owners (also called members).
  • The percentage of membership interests of each member and the method of valuation.
  • The process for members to exit the LLC.
  • The names of all managers and members.

How to Form an LLC in Texas

In Texas, an LLC structure can be used to manage a company or to hold assets such as vehicles, aircraft, real estate, or boats. To form an LLC in Texas, first do a business search on the Secretary of State website to make sure your desired LLC name is available. Your name must be amended with:

  • L.L.C.
  • LLC
  • Limited Liability Co.
  • Limited Liability Company
  • Ltd. Liability Co.
  • Ltd. Liability Company
  • Limited Company
  • Limited Co.
  • Ltd. Co. 

When you find a name that is available, you should also purchase the domain name.

You must appoint a registered agent for your LLC, which can be either an organization or individual based in Texas. The registered agent must sign Form 401A, Consent to Serve. 

File the Certificate of Formation if your LLC will be based in Texas (domestic). Alternatively, you may have to file the Application for Registration, along with a copy of your Certificate of Existence, if your LLC is based elsewhere but will do business in Texas. These forms can be filed online or mailed in duplicate along with a filing fee of $300 for domestic and $750 for foreign applications. Mailed applications should be sent to: PO Box 13697, Austin, TX 78711-3697. 

After your application is approved, you can file the optional Operating Agreement if you choose. You can also apply for an Employer Identification Number (EIN), which is used like a Social Security Number to identify your business with the Internal Revenue Service (IRS). You'll need the EIN to:

  • File taxes
  • Open business bank accounts
  • Hire and pay employees. 

U.S. residents can apply online or through the mail for a free EIN. Foreign residents and LLCs owned by another LLC cannot apply online and must submit Form SS-4 via mail or fax.

Why an Operating Agreement Matters in Texas

Although Texas does not legally require LLCs to adopt an operating agreement, having one is a smart business move. Without it, your LLC will automatically be governed by the Texas Business Organizations Code (BOC), which may not reflect your intended internal operations. An operating agreement provides clarity and control over:

  • The allocation of profits and losses
  • Roles and responsibilities of members and managers
  • Procedures for decision-making and dispute resolution
  • Steps for member withdrawal or death
  • Transfer of ownership interests

Without a formal agreement, disputes among members are more likely, and courts may apply default rules that don’t align with your business intentions. A signed agreement helps prove the legitimacy of your business, which is especially important in lawsuits or when applying for loans.

Types of Texas LLCs and How They Affect Your Agreement

Texas law recognizes several forms of LLCs, and the type you choose can influence the provisions in your LLC agreement:

  • Traditional LLC – The most common structure, not classified as series, professional, or corporate LLCs.
  • Series LLC – Allows the creation of separate “series” under one master LLC, each with its own assets and liabilities. The LLC agreement should address governance, asset protection, and inter-series operations.
  • Professional LLC (PLLC) – Restricted to licensed professionals such as doctors, lawyers, and accountants. Agreements must comply with industry licensing rules.
  • S-Corp LLC – A tax election allowing pass-through taxation while potentially reducing self-employment taxes. Your agreement should address how distributions and salaries are handled.
  • C-Corp LLC – Elects corporate taxation; agreements should include provisions for corporate formalities, retained earnings, and dividends.

Selecting the right LLC type at formation—and tailoring your agreement accordingly—ensures legal compliance and operational clarity.

How to Write an Operating Agreement

The following is a guideline to help you compose your operating agreement:

1. Download the operating agreement form from the Texas Secretary of State website and enter your company name.

2. Enter the document's effective date.

3. Enter the state of location and the full name and business address of the owner(s).

4. For a multiple-member LLC, enter the capital contribution amount for each member.

5. State the distribution percentages for each member if the LLC has multiple members.

6. Detail procedures for:

  • Annual meeting and date
  • Interest assignments
  • Company property ownership
  • New member admission
  • Right of first refusal
  • Withdrawal events
  • Liquidation and dissolution
  • Member representation
  • Notices
  • Arbitration
  • Indemnification
  • Amendments.

7. Each member and the company representative must sign the document. The company must keep the document on file.

Key Provisions to Include in a Texas LLC Agreement

While every Texas LLC can customize its operating agreement, certain sections are highly recommended for clarity and legal protection:

  1. Organization – State the LLC’s name, formation date, business purpose, and initial members.
  2. Management Structure – Define whether the LLC is member-managed or manager-managed, and outline decision-making authority.
  3. Capital Contributions – Specify the initial investments of each member and the procedure for future contributions.
  4. Distributions – Establish how profits and losses are allocated, including distribution schedules.
  5. Membership Changes – Detail procedures for adding or removing members, handling death or withdrawal, and transferring ownership interests.
  6. Voting Rights – Define quorum requirements, voting thresholds (simple majority, supermajority, unanimous), and tie-breaking methods.
  7. Dissolution – Outline steps for winding up the LLC, paying debts, and distributing remaining assets.

Addressing these topics in advance helps prevent disputes and ensures the LLC operates in line with member expectations.

Single-Member vs. Multi-Member Operating Agreements

The content of a Texas LLC operating agreement may differ depending on the number of members:

Single-Member LLCs:

  • Outline the sole owner’s authority
  • Clarify how the LLC is taxed (pass-through or corporate)
  • Establish a clear separation between business and personal assets

Multi-Member LLCs:

  • Define each member’s capital contributions and ownership percentages
  • Establish voting rights and quorum requirements
  • Address what happens if a member wants to leave or dies
  • Describe profit and loss distribution formulas

Regardless of the structure, all Texas LLCs benefit from documenting how the company will be managed, which helps avoid conflict and safeguard limited liability status. 

Member-Managed vs. Manager-Managed Structures in Texas

Your LLC agreement should clearly identify whether your company is member-managed or manager-managed:

  • Member-Managed LLCs – All members participate in daily operations and vote on major decisions. This structure suits smaller businesses where owners are actively involved.
  • Manager-Managed LLCs – Members appoint one or more managers to handle daily operations. This is ideal when some members are passive investors or when professional management is preferred.

In either case, your Texas LLC agreement should define:

  • Which decisions require a member vote versus manager approval
  • The scope of authority for managers
  • How managers are appointed or removed

Clearly defining governance reduces the risk of internal disputes and provides transparency for all parties.

Texas LLC Annual Report

All Texas LLCs must file an annual Public Information Report and Franchise Tax with the Office of the Comptroller, regardless of whether the business conducted activities or earned income during the year. The franchise tax is typically 1 percent of gross receipts over $1 million, but it varies by industry. This report is due by May 15, and the forms can be downloaded from the website of the Comptroller.

Franchise Tax and Public Information Report Tips

To maintain your Texas LLC in good standing:

  • File by May 15 – Submit both the Public Information Report and Franchise Tax to the Texas Comptroller annually.
  • No Revenue? Still File – Even if your LLC earns no income, you must submit these filings to avoid penalties.
  • Tax Thresholds – Many small businesses qualify for a “no tax due” status if revenue is under the annual threshold set by the Comptroller.
  • Filing Method – You can file online through the Texas Comptroller’s Webfile system or by mail.

Late filings can result in forfeiture of your LLC’s right to conduct business in Texas.

Texas LLC Compliance Obligations

+In addition to the annual Public Information Report and Franchise Tax, your Texas LLC must comply with other requirements to maintain good standing. These may include:

  • Registered Agent Requirements: Your LLC must maintain a registered agent with a physical address in Texas. Failure to do so can result in administrative dissolution.
  • Business Records: Texas law requires LLCs to keep current and accurate records at their principal office, such as:
    • A list of members and their contact info
    • Copies of the Certificate of Formation and amendments
    • Financial statements and tax returns
  • Reporting Changes: If your LLC’s registered agent, address, or ownership changes, you must file an amendment with the Secretary of State to update your Certificate of Formation.

Failing to meet these requirements could lead to penalties, loss of liability protection, or dissolution of your LLC.

Business Licenses and Permits

Consult with the municipality where your LLC is located to find out whether your business needs a license or permit to operate. These regulations vary for each town or city.

Where to Store Your Operating Agreement

While Texas does not require filing your LLC operating agreement with the Secretary of State, it's essential to maintain a signed copy in your company’s internal records. Store the document securely:

  • In both physical and digital formats
  • In a location accessible to all members
  • With other core business documents, such as EIN confirmation letters, banking records, and minutes of major decisions

If you amend your agreement in the future, all members should sign the updated version, and the older copy should be archived but marked as superseded. 

Frequently Asked Questions

  1. Is an LLC agreement required in Texas?
    No. Texas law doesn’t require it, but having one is strongly advised to set rules, protect assets, and avoid default state laws.
  2. Can I use the same LLC agreement for a Series LLC?
    No. A Series LLC needs specialized provisions addressing governance, asset protection, and series-specific liabilities.
  3. Who can own a Texas PLLC?
    Only licensed professionals in Texas, such as attorneys, doctors, and accountants, can own and operate a PLLC.
  4. Does the Texas LLC agreement need to be notarized?
    Not necessarily, but notarization can add a layer of authenticity and prevent disputes over signatures.
  5. What happens if I don’t file the annual franchise tax?
    The Texas Comptroller can revoke your LLC’s good standing, leading to loss of limited liability protection and possible dissolution.

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