Generate document
Generate

The Texas LLC operating agreement is an important legal document that is recommended for those opening a limited liability company of any size. This document allows the member(s) and/or owner(s) outline responsibilities, identify voting rights, break down financial distribution, and perform other ownership responsibilities.

From TX Bus Orgs § 101.001 (2019):

(1) “Company agreement” means any agreement, written or oral, of the members concerning the affairs or the conduct of the business of a limited liability company. A company agreement of a limited liability company having only one member is not unenforceable because only one person is a party to the company agreement.

Texas Operating Agreement Law

Per Sec. 101.052 of the Texas Business Organization Code:

(a) Except as provided by Section 101.054, the company agreement of a limited liability company governs:
(1) the relations among members, managers, and officers of the company, assignees of membership interests in the company, and the company itself; and
(2) other internal affairs of the company.
(b) To the extent that the company agreement of a limited liability company does not otherwise provide, this title and the provisions of Title 1 applicable to a limited liability company govern the internal affairs of the company.
(c) Except as provided by Section 101.054, a provision of this title or Title 1 that is applicable to a limited liability company may be waived or modified in the company agreement of a limited liability company.
(d) The company agreement may contain any provisions for the regulation and management of the affairs of the limited liability company not inconsistent with law or the certificate of formation.
(e) A company agreement may provide rights to any person, including a person who is not a party to the company agreement, to the extent provided by the company agreement.
(f) A company agreement is enforceable by or against the limited liability company, regardless of whether the company has signed or otherwise expressly adopted the agreement.

Forming an LLC in Texas

  1. Conduct a name search
  2. Choose a registered agent
  3. File formation articles
  4. Draft an operating agreement

To qualify as an LLC, all Texas businesses will need a legally registered business name, which must include one of:

  • LLC
  • L.L.C.
  • LC
  • L.C.
  • Limited Liability Company
  • Std. Liability Co.

It should also be distinguishable or unique from other LLCs without infringement.

The name may require additional verification to include restricted words that relate to the business type or profession (university, attorney, bank). They may also require a licensed practitioner be part of the LLC.

The name cannot include government agencies such as NSA, FBI, DEA, etc.

The name cannot include “inc”, “corp”, or other identifiers relating to other business types.

To conduct the name search, use the Texas Taxable Entity Search website.

Step 2: Choose Your Registered Agent

Every Texas LLC must appoint a registered agent for the company. The registered agent is responsible for receiving service of process on behalf of the company. They must complete a Statement of Consent that includes a signature and acceptance of the responsibilities associated with being a registered agent.

The agent must:

  • Be 18 years or older
  • Be available during business hours (9am – 5pm local time)
  • Be a resident of the state
  • Have a physical (not a P.O. Box) address in Texas

When using a registered agent service, the agent must be authorized to do business in Texas.

Step 3: File Your Formation Articles

In order to legally establish an LLC, you must file articles of formation. They can be filed through the mail or online, but online submissions can be processed more quickly.

Domestic filings (new businesses in-state) must complete a Certificate of Formation (Form 205).

Online Filing (Domestic):

Mailed Filing (Domestic):

  • $300 fee (plus optional $25 expedited processing fee)
  • Turnaround time: 7 to 10 business days, or 2-3 days upon receipt with expedited processing
  • Complete the Certificate of Formation and mail 2 copies to:

Corporations Sections
Secretary of State
PO Box 13697
Austin, TX 78711

Foreign LLCs must complete an Application for Registration (Form 304).

Online Filing (Foreign):

Mailed Filing (Foreign):

  • $750 fee (plus optional $25 expedited processing fee)
  • Turnaround time: 7 to 10 business days, or 2-3 days upon receipt with expedited processing
  • Complete the Certificate of Formation and mail 2 copies to:

Corporations Sections
Secretary of State
PO Box 13697
Austin, TX 78711

Step 4: Draft a Texas Operating Agreement

It is recommended that all Texas LLCs use an operating agreement for their business. This agreement can be used to document the rights and responsibilities of the members in addition to outlining the framework for how financial, legal, and operational matters are handed.

The legal document can be used in court to settle disputes, therefore it is recommended that all directors each keep a copy, and that a copy is held with the other business records until required. The agreement does not need to be filed with the state.