If you are a business owner in Texas, understanding your LLC operating agreement is essential for protecting yourself and your company. An operating agreement sets the rules for how an LLC will be managed and outlines each member’s rights, liabilities, responsibilities and duties.
It also defines what happens under certain circumstances—like if a member dies or begins to work on competing projects. In this blog post, we’ll explore the basics of forming a Texas LLC operating agreement so that you can understand its importance for safeguarding both yourself and your business.
If you need help creating your LLC Operating Agreement in Texas, then call the Houston Business Lawyers at (832) 509-0445.
In the video below, Attorney Tommy Holmes discusses a few of the factors that you should consider when creating your Tx LLC Operating Agreement. With so much riding on your LLC Agreement, you should always consult a licensed attorney in your jurisdiction who focuses on business law.
A Texas LLC Operating Agreement should…
- Identify the members and their respective degrees of ownership
- State whether the LLC is managed by the members or by managers, and if by managers,
- The names of each manager
- Describe capital accounts and the capital contribution of each member
- Describe how the LLC will deal with loans from members, additional capital contributions and deficit balances in capital accounts
- Describe how meetings will be called,
- Describe member voting rights and procedures
- Describe the powers, numbers and election of managers, if applicable
- Describe regular and special meetings of managers and their voting rights
- Described manager’s compensation, liability and indemnification issues
- Describe the duties and responsibilities of the tax matters partner
- Describe the duties and responsibilities of the officers
- Describe the company’s policy regarding allocations and distributions
- Describe how books and records, tax returns and bank accounts will be managed
- Describe how transfers of interest may, or may not, be made
- Outline a procedure for dissolution of the company
Additionally, the LLC Operating Agreement should be signed by all members, and read in its entirety by each member. The Agreement should be signed under the advise of individual counsel.
You should also consider avoiding any situation where you are signing a “form” agreement or “one size fits all” LLC Operating Agreement, as each LLC is likely to have unique legal requirements.
Houston Business Attorney
We can help you draft a proper LLC Operating Agreement and assist with any business legal matters. Call today for a free consultation (832) 509-0445.
See also…Houston Real Estate Attorneys
Then Things You Should Know About Texas LLC Operating Agreements
- An LLC operating agreement is a legal document that outlines the ownership and management structure of an LLC.
- An LLC operating agreement is not required in Texas, but it is highly recommended.
- An LLC operating agreement can help to prevent disputes among the LLC’s members.
- An LLC operating agreement can help to clarify the roles and responsibilities of the LLC’s members.
- An LLC operating agreement can help to protect the personal assets of the LLC’s members.
- An LLC operating agreement can be used to establish voting rights among the LLC’s members.
- An LLC operating agreement can be used to establish profit sharing arrangements among the LLC’s members.
- An LLC operating agreement can be amended at any time by a majority vote of the LLC’s members.
- An LLC operating agreement can be terminated at any time by a majority vote of the LLC’s members.
- If you are thinking about forming an LLC in Texas, it is important that you consult with an experienced business attorney to discuss your options and ensure that you are taking all necessary steps to protect your interests
