Updated November 17, 2020:

A sample LLC operating agreement in Texas is a legal document used by business entities to outline the policies and procedures of the business as well as any other aspects of the operation of the company.

Information About a Texas LLC Operating Agreement

General Information

  • An operating agreement is not a requirement by the State of Texas to do business within the state. It is advisable for owners and members to consider creating the document. 
  • Unlike other documents of formation, the operating agreement is not filed with the state. It is an internal document meant to be part of your business records
  • An operating agreement may also be referred to as LLC Bylaws, LLC Setup Agreement, Limited Liability Company Operating Agreement, and LLC Operations Agreement. 
  • An operating agreement is used to define the terms of the business. It can be created when you're ready to form the LLC or after the business is up and running.
  • Completion of an operating agreement provides protection to the members and owners of the LLC who are contributing to the company or are managing members of the company.  
  • With the operating agreement in place, the financial accounts and personal assets of owners and members are protected. The business remains liable to satisfy any claims.
  • If an operating agreement is not in place, should the business be faced with litigious activity, members and owners would be financially liable if the court ruled in favor of the claimant.
  • A copy of an LLC's operating agreement may be necessary for several reasons: 
    • if you are applying for financial funding from a lender
    • if you are purchasing real estate a title company may request a copy
    • if you are requesting the services of an accountant or tax professional
    • if you are seeking legal advice from lawyer
    • if you are presenting information to  potential investors who have an interest in the LLC
  • If you are summoned to court for a legal action brought against the LLC, the court will most likely request a copy of the operating agreement for your LLC. The agreement serves as proof to the court that the LLC is a well-organized business entity that can handle issues that arise.

Types of LLC Operating Agreements

  • A multi-member operating agreement is used when a business has more than one member to establish company policies and procedures and to agree on protection for the LLC's members. For tax purposes, the Internal Revenue Service will tax a multi-member LLC the same way it taxes a partnership.
  • A single-member operating agreement is used by the single owner to establish procedures that will protect their assets both financially and personally. The Internal Revenue Service will tax a single-member LLC as a sole proprietorship. 

About the Operating Agreement Form

  • An operating agreement serves as a working document and should be designed to be fluid, allowing for any changes necessary as the business grows.
  • To complete the form requires specific information that is readily available on your formation documents. Information needed includes the formation date of the LLC, the purpose of the LLC, name and address of the registered agent, the percentage of ownership of each member, and the names and addresses of each member.
  • Download a copy of an operating agreement form. Fill in all applicable sections.
  • Once the operating agreement has been completed, the owners and members should carefully review it to ensure they understand the terms, conditions, rules, regulations, policies, and procedures.
  • The agreed-upon operating agreement must be dated, signed by the company representative, and have the signature of each member.
  • Each member or owner should retain a copy of the operating agreement for their records.
  • For businesses that have complex ownership agreements, multiple investors, a large number of members, or require industry-specific management, it is recommended to consult with an attorney.
  • If there is any confusion about the verbiage and there is not a clear understanding of the operating agreement by members or owners, consider consulting an attorney to clarify the steps and/or complete the operating agreement form. 
  • The operating agreement for an LLC does not need to be notarized.
  • If you make changes to the operating agreement once it has been agreed to by all members/owners, retain the original copy and save the changes as a new version.

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