Key Takeaways

  • A Texas LLC operating agreement outlines ownership, management, and liability protections for LLC members.
  • This document, while not legally required in Texas, helps solidify internal business protocols and avoid disputes.
  • Texas LLC operating agreements can be used for single- or multi-member LLCs and help prevent default rules under state law from applying.
  • A well-drafted operating agreement includes details about ownership percentages, voting rights, distributions, and dissolution.
  • Filing an operating agreement helps maintain liability protection by clearly separating business and personal assets.
  • Texas requires LLCs to file annual franchise tax and information reports, even if there’s no business activity.

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.

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.

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. 

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.

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

Is a Texas LLC operating agreement legally required? No, it’s not legally required in Texas, but it is highly recommended for protecting your business and avoiding default state rules.

Can I create a Texas LLC operating agreement myself? Yes, you can draft your own agreement, but it's wise to use attorney-reviewed templates or consult a business attorney to ensure compliance and completeness.

Where do I file my Texas LLC operating agreement? You don’t file it with the Secretary of State. Instead, keep it with your LLC’s internal records.

What happens if I don't have an operating agreement? Your LLC will be governed by default rules under the Texas Business Organizations Code, which may not align with your business’s intended operations.

Does a single-member LLC in Texas still need an operating agreement? Yes. Even single-member LLCs benefit from an operating agreement to prove the separation between personal and business finances and protect limited liability status.

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