Texas LLC Operating Agreement
The Texas LLC Operating Agreement is the core document that is referred to when issues concerning a Texas limited liability company (“LLC”) need to be resolved.
The LLC Operating Agreement is the most important document for your Texas LLC.
In the case of a single member LLC, without the formality of an LLC Operating Agreement, the LLC can closely resemble a sole proprietorship, which does not limit your personal liability for business debts of the LLC.
With respect to a multi-member LLC, the LLC Operating Agreement reflects the agreement among the members with respect to the affairs and management of the LLC and governs the relationship amongst the members of the LLC. By having an LLC Operating Agreement, the members will be provided with a clear set of rules that all members have agreed upon greatly reducing the likelihood of disagreement between them in the future. A LLC Operating Agreement will also greatly reduce financial and management misunderstandings, and make sure your business is governed by your own rules -- not default rules created by the state of Texas.
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The LLC operating agreement does not have to be filed with any state agency. All states, including the state of Texas will enforce valid operating agreements entered into among LLC members. The operating agreement will only be enforced against the persons who are parties to the agreement. Therefore, it is extremely important that all members of an LLC sign the operating agreement.
Your Texas Limited Liability Company
LLC Filing Office
Secretary of State
Statutory Filings Division
Secretary of State
P.O. Box 13697
Austin, TX 78711-3697
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Entity or Franchise Level Tax
Texas does not require partnerships to pay a general net worth tax or a tax based on net income. However, LLCs are subject to the Texas franchise tax regardless of their classification for federal income tax purposes. The tax is composed of two components: a capital component and an eared surplus component. The franchise tax is based on the greater of .25% of net taxable capital or 4.5% of net taxable earned surplus.
State LLC Act
The Texas LLC Act is contained in Title 32, Part 3 of the Vernon’s Texas Civil Statutes.
The Texas LLC Act
Important Statutory Rules
Note: The Texas Limited Liability
Company Act refers to operating provisions adopted by a
Texas LLC as its regulations
An LLC is managed by its members unless the Operating Agreement states that the LLC is to be managed by one or more managers.
Admission of Members
Unless otherwise provided, new interests in the LLC must be issued with the approval of a majority of members. Unless otherwise provided in the Operating Agreement, the admission of a transferee as a member must be approved by the unanimous consent of all the members.
Amending the Operating Agreement
Unless otherwise provided in the Operating Agreement, amendments to the Operating Agreement require approval of a majority of the members.
Unless otherwise specified in the Operating Agreement, the majority of the members must approve the voluntary dissolution of the LLC.
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