Every Texas LLC should have an Operating Agreement, but getting one doesn’t have to be expensive. You can download and customize your own Operating Agreement using our free template below.
Texas LLC Operating Agreement (Member-managed)
Texas LLC Operating Agreement (Manager-managed)
What is a Texas LLC Operating Agreement?
A Texas LLC Operating Agreement is a written contract between the LLC Members (LLC owners). This legal document includes detailed information about LLC ownership structure, who owns the company and how the LLC is managed.
Single-Member LLCs and Multi-Member LLCs should draft an Operating Agreement, keep it with their business records, and give a copy to all Members.
What should be included in LLC Operating Agreements?
Your Operating Agreement will include basic information about your Limited Liability Company. Some of the information will be the same as what is listed in your Texas LLC Certificate of Formation. Operating Agreements should include:
- LLC Name
- LLC effective date
- Texas Registered Agent (if applicable)
- purpose of your LLC
- duration of your LLC
- and how your LLC will be taxed
Related Reading: Is a Registered Agent a Member of an LLC?
Your Operating Agreement will list all the LLC Members and how much of the Limited Liability Company they each own.
How much of the LLC someone owns is called their “LLC Membership Interest”.
LLC Membership Interest is most often expressed as a percentage (like 5%, 50%, 100%, etc.).
Initial Capital Contributions (putting money into your LLC)
After your LLC is approved, you should open an LLC bank account and put money into that account.
Each of the LLC Members makes an initial capital contribution. Capital contribution simply means a deposit of money into the LLC bank account.
You will list the initial capital contributions in your LLC’s Operating Agreement.
Pro tip: If you complete your Operating Agreement before you have opened an LLC bank account, just enter the amount the Members plan to deposit. If the amount of your deposit changes, it’s okay to edit your Operating Agreement with the actual amounts later.
- Related article: To learn more about capital contributions, like how much you should contribute, check out LLC Capital Contributions.
Statement about taxes
You will list how your LLC will be taxed in your Operating Agreement. There are four common ways an LLC can be taxed:
- LLC taxed as a Sole Proprietorship
- LLC taxed as a Partnership
- LLC taxed as an S-Corporation
- LLC taxed as a C-Corporation
Voting Rights of LLC Members
The rules of membership voting will be spelled out in your Texas LLC’s Operating Agreement.
If you use the Member-managed Operating Agreement, the voting powers are proportionate to the LLC Membership Interest.
If you use the Manager-managed Operating Agreement, the voting powers are also proportionate to the LLC Membership Interest. Then the Members vote to elect one or more Managers. The Manager(s) then has authority to make certain decisions on behalf of the LLC (without needing a vote by the Members).
However, certain things, like adding or removing an LLC Member, require a vote of the Members (and the Manager has no say).
Make sure all Limited Liability Company Members have a copy
Once you finalize your Operating Agreement, make sure all the Members have a copy.
We recommend keeping a copy of the Operating Agreement with your LLC business records.
Operating Agreement FAQs
Is an Operating Agreement required for an LLC in Texas?
As per Section 101.052 of the Texas Business Organization Code, an Operating Agreement (aka Company Agreement) isn’t required for an LLC in Texas.
But while LLC Operating Agreements aren’t required in Texas to conduct business, we strongly recommend having a Texas Operating Agreement for your LLC.
Additionally, financial institutions (like banks) and other organizations may need to see a copy of this paperwork in order for you to do business with them.
Why should an LLC with only one Member still have an Operating Agreement?
It’s best to have a written Operating Agreement, even if you are the sole Member of your Texas LLC (a Single-Member LLC).
If you go to court, a Single Member Operating Agreement helps prove that your Single-Member LLC is being run as a separate legal entity. And that protects your personal assets.
Does a Multi-Member LLC need an Operating Agreement?
It’s best to have an Operating Agreement, especially for a Multi-Member LLC. The Multi Member Operating Agreement of a Limited Liability Company governs internal affairs: how the members interact with each other and with the LLC itself.
This is your LLC’s governing document that will spell out ownership percentages (aka membership interests), profit distribution, the company’s procedures and management responsibilities.
If you go to court, an Operating Agreement helps prove that your Multi-member LLC is being run as a separate legal entity.
Do I have to send my Operating Agreement to the state?
No, you don’t have to send your Operating Agreement to the Texas Secretary of State or any other government agency. (That’s why there is no “filing fee” for an Operating Agreement.)
Operating Agreements are “internal documents”. Meaning, the Members just need to keep a copy with their business records.
Operating Agreements are legal documents (and are binding upon the LLC Members) because of the Members’ signatures. They don’t need a government stamp of approval.
However, in the future, if your company were involved in a lawsuit or an audit, a court or government agency might ask to see a copy of your Operating Agreement.
Additionally, you may also need to show this document to:
- financial institutions when you open a business bank account
- financial institutions if you apply for a loan for the LLC
- a title company if your LLC is buying real estate
Does my LLC Operating Agreement need to be notarized?
No, your Operating Agreement doesn’t need to be notarized. Each Member just needs to sign it.
Once you (and the other LLC Members, if applicable) sign the Operating Agreement, then it becomes a legal document.
Can I write my own Operating Agreement?
Yes, but we recommend using an Operating Agreement template.
An Operating Agreement is a legal document. You don’t have to hire a lawyer to write one, though. Using a template helps make sure you cover everything you need to.
LLC University® offers free Operating Agreement templates that you can download to write your own LLC Operating Agreement. That’s the best way to get a free custom Operating Agreement.
How do you write a simple Operating Agreement?
If you wanted to write a simple Texas Operating Agreement without using a template, you could. You’d need to check with the Texas LLC Act to make sure it meets all the requirements.
For example, at a minimum, you’d want your Texas LLC name, your Registered Agent information, your business purpose, the names of the LLC Members, and information about initial capital contributions.
However, there is a lot more information that is important to document about your LLC.
It’s probably a lot easier to start with an existing template. We have a free Operating Agreement template you can download on this page.
What is the difference between an LLC and an Operating Agreement?
An LLC (Limited Liability Company) is a type of business structure. It’s a legal business entity that you form by filing a document called the Certificate of Formation with the state.
An Operating Agreement is an internal document that governs how your LLC is run. It contains rules about how much of the company each Member of the LLC owns, and other details about management and taxes.
Said another way, the LLC is your legal entity. And the Operating Agreement is a written set of rules for how the LLC will operate.
You could have an LLC without an Operating Agreement (but you shouldn’t). But you can’t have an Operating Agreement without an LLC.
How do I set up an LLC in Texas?
Here are the steps to starting an LLC in Texas:
- Choose an LLC name and make sure it’s available
- Choose who will be your Texas Registered Agent
- File the Texas LLC Certificate of Formation
- Complete and sign an LLC Operating Agreement
- Get a Tax ID Number (EIN) from the Internal Revenue Service
- Research business license requirements
- Open an LLC bank account
Note: These steps tell you how to start a Domestic LLC in Texas. If you already have an LLC in another state and just need to register it in Texas, the process for a Foreign Limited Liability Company is different.
Texas LLC Act
IRS: Paying Yourself
Texas Secretary of State: Selecting a Business Structure
TEXAS LLC GUIDE
Follow the lessons below to form your Texas LLC.
26 comments on “Texas Operating Agreement”
Disclaimer: Nothing on this page shall be interpreted as legal or tax advice. Rules and regulations vary by location. They also change over time and are specific to your situation. Furthermore, this comment section is provided so people can share their thoughts and experience. Please consult a licensed professional if you have legal or tax questions.
Hey Matt, Thanks for putting this out there, It was super helpful and easy to follow.
I can use this free operating agreement for my business? Do I have permission to?
Of course Logan :) Yes, you have our permission.
What a wonderful resource! Should existing real estate investments be transferred to the LLC or listed in the contributions?
Thanks Byron! If you want the benefits of the LLC, the properties need to have their title transferred into the name of the LLC(s).
Thank you for providing this useful information and resources. What would be major differences in a Single-Member Professional LLC(PLLC) vs a SMLLC Operating Agreement? I understand the generality of the types of members that can be associated with a PLLC and liability amongst the professional members. Would a more in-depth section be needed within the PLLC Operation Agreement to cover the professional members and professional services offered?
Again, Thank you
Hi Victor, we don’t do a lot with PLLCs, so can’t answer in depth here. But typically, a customized Operating Agreement for a PLLC is common.
What needs to be changed in these operating agreements for a Texas series LLC?
Hi Kristy, you’d want an entirely different Operating Agreement; one specific to your Series LLC. We don’t cover Series LLCs or Series LLC Operating Agreement at this time. Thanks for your understanding.
This site is fantastic. Thanks for putting it together.
The sample Operating Agreement for Texas allows for assignment of financial interest without impacting the voting rights. Do you have a sample form for this Assignment of Interest? Would this need to be filed with the state of Texas if/when it is created?
Hi Randall, thank you! You’re very welcome. We don’t have an Assignment of LLC Membership Interest form at this time. No, it wouldn’t need to be filed with the state. However, you’d file an Amendment to add/remove a Governing Person though. Hope that helps.
Once you have completed the Operating Agreement, does it have to be notorized to be valid? Do you have to file it through the SoS? What is the next step once you have completed all of the essential information?
Hi Chambers, no, the LLC Operating Agreement is an internal document. It doesn’t get sent to the state. It’s a private document for the LLC Member(s). The Operating Agreement doesn’t need to be notarized. If you are following our Texas LLC course, please follow the “detailed lessons” at the top of the page. The next step is the EIN Number. Hope that helps.
Hello Matt. I recently filed for my brand new companies LLC and I am partnering with a friend of mine, I accidentally only put him as a Managing Member thinking since it’s my company, I did not need to add myself also but apparently that is wrong. So now I have an LLC that shows me as the registering agent pretty much and my friend as the Managing Member. How do I add myself in as a managing member also? Do I just fill out an operating agreement and put both of our names in? Bank would not allow me to open up account since he’s the only one showing as managing member. Newbie mess up on my end.
Hi John, based on what you said, it sounds like in the Texas Certificate of Formation (the document that creates the LLC), your partner is the only person listed in the “Governing Authority” section. If that’s the case, you’ll need to file a Certificate of Amendment (Form 424) and pay the $150 filing fee in order to amend the Governing Authority section. Then you can amend the Operating Agreement or create a new one with you and he listed as the LLC Members. Hope that helps.
In a member-managed LLC where the two members are husband and wife (and are a joint qualified venture), I’ve seen elsewhere on this site that the “members” should be on one line as “jack and jill doe”. Should this be the same on the signatures of the operating agreement (i.e. same line) or on separate lines? Thank you for all this info!!
Hi Amanda, you are correct. In a husband and wife LLC that is taxed as a Qualified Joint Venture LLC, the husband and wife will own the LLC as “one unit”. So instead of the Operating Agreement showing the LLC Members as “Jack Doe, 50% ownership” and “Jill Doe, 50%” ownership (note, 50/50 isn’t required is this example… it can be divided in any manner), it’ll be “Jack and Jill Doe, 100% ownership”. For the signatures, both people can sign on separate lines. Hope that helps!
1) how do I add partners as managing members? Do I need to file anything with the Texas Secretary of State?
2) in the operating agreement, does profit sharing have to match ownership shares? With 3 partners, 2 are more active in day-to-day and the other is more a silent partner. Can 2 of us take the first X amount of profit to cover our living expenses and everything thing after that amount is shared by 1/3?
Hi Chad, while you don’t have to amend your Certificate of Formation, you certainly can, and some places like banks may want to see a member/manager there if they are going to be added to the LLC’s bank account. However, it’s the Operating Agreement where this is done. You can amend your Operating Agreement or create a new one. If the adding/removing of members changes your tax classification, you’ll also need to update the IRS. And no, share of profits doesn’t have to match ownership percentages. Hope that helps.
Do you have any info on series llcs set up in Texas?
I’ve been searching everywhere for months for something like this, and your explanation of LLC formation is by far the most comprehensive and clear. Thanks so much for taking the time to spell this out for otherwise overwhelmed aspiring entrepreneurs!
Also, I’m planning to start a single-member content marketing consultancy, and don’t anticipate running into litigious risks.
Still, I’d like to cover my bases and I read that in case of a charging order, (for LLCs doing business in other states besides their base/incorporated state), it may be a good idea to give a small percentage to a trusted individual.
Do you know if that’s true?
Or is it easier to add that the LLC will not make distributions in event of a charging order?
If so, should this part go into the Operating Agreement?
Thanks so much for imparting all your knowledge, these videos have taken a load of stress off me!
Hi Erica, great to hear! Thank you for the kind words and glad to hear our information has been helpful :) We haven’t published information on charging order protection yet, but we will soon. If you’d like the extra protection, you can form a parent LLC in Wyoming, then have your 2nd LLC owned by the Wyoming LLC. Which state would the child LLC be located in? If Texas, then in your Certificate of Formation, under Article 3 Governing Authority, you’d check off “B” and list your Wyoming LLC as the Governing Person 1 (don’t list your name anywhere in the Article 3). Then you’d also list your Wyoming LLC as the 100% Member in your Texas LLC’s Operating Agreement. That would connect the LLCs and make it a parent-child relationship. When signing for the Wyoming LLC, you’d sign your actual signature, but under your signature, make sure to properly designate who you are signing for. So you’d write “Wyoming Business Name, LLC, by Sally Jones, Member”). Hope that helps.
I can’t thank you enough for lending your expertise and providing this free and easy operating agreement.
I hope that one day our paths cross so that I might repay your generosity.
All the best,
Jeff, thanks so much for your awesome comment! Just pass along our website name the next time you bump into someone forming an LLC ;-)
Can you add a section for those who want to transfer the business to someone else? I’m a SMLLC and if I die, the state of Texas will get the LLC. I want to transfer it to someone else for them to run.
Hi Jared, I’m not sure where you were reading that, but it’s not correct. The state of Texas does not take over your LLC upon your passing. Your LLC interest will go to whoever is listed in your will or your next of kin (wife or kids, for example). I recommend working with a Texas attorney after your LLC is formed for any custom provisions you’d like to add to your Operating Agreement. We will also look at improving ours. Thank you for your comment and I hope I’ve been helpful.