You have formed, or are about to form, an LLC in Texas. The Certificate of Formation creates the company, but it does not answer many of the questions that arise once you actually start running it. Who can make decisions? How are profits divided? What happens if an owner wants to leave? Who takes over if something happens to you? A Texas LLC operating agreement is where you can answer those questions.

Texas law generally calls this document a company agreement. The Texas Business Organizations Code defines it broadly as an agreement among the members concerning the affairs or conduct of the LLC’s business. It may technically be written, oral, or implied. For a single-member LLC, Texas law also expressly recognizes that the agreement is not unenforceable merely because one person is its only party. For practical purposes, however, putting the agreement in writing gives you something far more useful: a clear record of how your LLC is supposed to operate. This guide explains what a Texas LLC company agreement does, whether you are legally required to have one, what to include, and how the document changes for single-member, multi-member, and series LLCs.

What Is a Texas LLC Operating Agreement?

A Texas LLC operating agreement is an internal agreement that establishes rules for the ownership, management, decision-making, financial arrangements, and other internal affairs of a Texas limited liability company. You may see it called either an operating agreement or a company agreement. In Texas statutes, “company agreement” is the formal term. The distinction between this document and your Certificate of Formation is important. Your Certificate of Formation is the document filed with the Texas Secretary of State to create the LLC. It contains basic information needed to establish the company.

Your company agreement, by contrast, deals primarily with what happens inside the company. Think of the Certificate of Formation as establishing that the business exists and the company agreement as establishing the rules under which its owners will run it. Texas law gives a company agreement considerable importance. Subject to statutory limitations, it governs relationships among members, managers, officers, assignees, and the LLC itself, as well as other internal affairs of the company. Where the agreement does not address an issue, applicable provisions of the Texas Business Organizations Code can fill the gap.

Is an Operating Agreement Required for an LLC in Texas?

Texas does not generally require an LLC to adopt a written operating agreement as a condition of forming the company. In fact, Texas law recognizes written, oral, and implied company agreements. That does not mean leaving the agreement unwritten is usually a good idea. Without clearly documented rules, disagreements can quickly become questions of what members remember discussing, what their past conduct suggests, or what Texas law provides when their own agreement does not address the issue.

Imagine two people starting an LLC together. One provides most of the money, while the other plans to work full-time in the business. They may initially agree that major decisions require both owners’ approval. Six months later, they disagree about signing an expensive lease. If their arrangement exists only in conversations and emails, working out exactly what authority each person has may be far more difficult than if their company agreement had dealt with the issue directly. A written agreement provides a reference point before the disagreement happens.

Do You File the Operating Agreement With the Texas Secretary of State?

No. The Texas Secretary of State specifically states that company agreements and other internal governing documents are kept by the business rather than filed with the Secretary of State. Texas law does not authorize the Secretary of State to accept these documents for filing. You should therefore keep the executed agreement with the LLC’s important business records and make sure the appropriate owners and managers have access to the current version.

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Why Have a Texas LLC Company Agreement

The biggest reason is not simply “because LLCs should have one.” It is because forming an LLC leaves many practical decisions unanswered. A useful agreement lets the owners make those decisions deliberately rather than discovering later that they had different assumptions.

Establish Who Owns What

In a multi-member LLC, the agreement can record each member’s ownership interest and what each member contributes to the company. Suppose you and a partner create an LLC. You contribute $70,000 while your partner contributes $30,000 plus substantial work in developing the business. Does that mean ownership is 70/30? 50/50? Something else? The answer should not be left to inference. The agreement can document exactly what the members decided.

Decide Who Actually Runs the Company

Texas LLCs can be structured so that the governing authority consists of members or managers. Texas law provides that if the company agreement states that the LLC is managed by managers, the managers form the governing authority. If it states that the LLC is member-managed, the members do. If the agreement does not establish the arrangement, the Certificate of Formation helps determine whether managers or members constitute the governing authority. This is why your documents need to work together. If your Certificate of Formation says the company has managers, but your internal agreement was copied from a member-managed LLC template without adapting it, you may create unnecessary uncertainty.

Establish How Important Decisions Are Made

Running a business involves decisions of very different importance. Ordering office supplies should not necessarily require the same approval as borrowing $500,000, admitting a new member, or selling the company. A good operating agreement can distinguish between routine authority and decisions requiring a member vote. It can also establish:

• who is entitled to vote;
• whether votes are based on ownership percentage or another formula;
• which decisions require a simple majority;
• which decisions require a supermajority or unanimous approval; and
• what happens if the members reach a deadlock.

For a 50/50 LLC, the last point deserves particular attention. A voting provision that simply says “majority approval is required” does not solve much if two equal owners disagree. A carefully designed deadlock process can establish what happens next.

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What Should a Texas LLC Operating Agreement Include?

There is no single operating agreement that works for every Texas LLC. A one-owner consulting business has very different concerns from a three-member construction company or an LLC holding multiple real estate investments. Still, most agreements need to address several core questions.

Company and Member Information

Start with the fundamentals: the LLC’s legal name, formation information, business purpose where appropriate, and member information. The agreement should make ownership clear rather than forcing someone to reconstruct it from contributions, emails, or accounting records later.

Capital Contributions and Ownership Interests

Document what each member is contributing and what ownership interest that contribution receives. Contributions may involve cash, property, or other arrangements. If owners may be asked to contribute additional money later, explain how that process works. For example, if the LLC suddenly needs another $50,000, can one member require the others to contribute? What happens if one member cannot or will not do so? Those questions become much harder when the business needs money immediately.

Management Authority

State whether the LLC will be member-managed or manager-managed and define the authority of the people running it. The agreement can also place limits on that authority. For example, a manager may be allowed to handle normal contracts but require member approval before borrowing above a stated amount or selling major company assets. Texas law gives the governing authority responsibility for directing the business and affairs of the LLC according to the company agreement first and then applicable statutory rules where the agreement does not provide otherwise.

Voting and Member Decisions

Explain who votes and what level of approval different decisions require.Pay particular attention to decisions that could fundamentally change the ownership or direction of the company, such as:

• admitting a new member;
• selling most of the company’s assets;
• amending the operating agreement;
• taking on substantial debt;
• changing management;
• merging or converting the business; or
• winding up the company.

The right voting rules depend on how much control the owners want to retain individually and how easily they want the business to act.

Profits, Losses, and Distributions

The agreement should explain how economic results are allocated among members and how distributions will be handled. Do not automatically assume that putting in 60% of the startup money means receiving exactly 60% of every distribution. The members need to understand the economic arrangement they are agreeing to, and tax consequences can complicate how allocation provisions should be drafted. If several members are involved, this is an area where advice from a CPA or business attorney may be particularly useful.

Transferring a Membership Interest

Eventually, an owner may want to leave, sell an interest, transfer it to a family member, or encounter a life event that changes the ownership situation. The agreement can establish what happens before that point. For example, the remaining owners might receive a right to purchase an interest before it can be offered to an outsider. The agreement can also address valuation, payment terms, and events such as death, disability, bankruptcy, or retirement. Without planning, owners may first confront these questions at exactly the moment when relationships are already under stress.

Adding and Removing Members

If another investor or business partner joins later, how are they admitted? The agreement should specify the required approval and how the new member’s ownership affects existing members. Similarly, forcing an owner out of an LLC is much more complicated than simply firing an employee. If the owners want circumstances under which a member can be bought out or expelled, those provisions should be carefully drafted.

Amendments

Businesses change. Your agreement should be capable of changing with them. Include a procedure for amendments, such as requiring a particular percentage of member approval and documenting the amendment in writing. This makes it possible to update ownership, management procedures, voting rules, or other provisions without leaving uncertainty about which version governs.

Dissolution and Winding Up

The agreement should also anticipate the end of the business or the possibility that the current owners no longer want to continue together. The provisions can address events that trigger winding up, who is responsible for the process, and how remaining assets will be handled after obligations are addressed. You hope not to need this section soon. But if you do need it, that is usually not the ideal time to begin negotiating it.

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Types of Texas LLC Operating Agreements

A Texas LLC operating agreement should reflect how the company is owned and managed. There is no official list of separate operating agreement “types” under Texas law, but the content will usually differ depending on whether the LLC has one owner, is managed directly by its members, or appoints one or more managers.

Single-Member LLC Operating Agreement

A Texas single-member LLC operating agreement is used when one person owns the LLC. Even without other members, the agreement can still document important details such as ownership, management authority, how business decisions are made, and what should happen if the owner can no longer manage the company. For example, someone who previously operated as a sole proprietor may decide to form a single-member LLC. The operating agreement can then become part of the LLC’s internal records and help clearly document how the new entity is intended to operate.

Member-Managed LLC Operating Agreement

In a member-managed LLC, the members themselves take part in running the business. The operating agreement can define each member’s authority and explain how decisions are made. This becomes especially important when there is more than one owner. For example, the agreement can address whether one member may sign contracts independently, how voting works, which decisions require approval from all members, and what happens if the owners disagree. Clear rules can reduce confusion later because each member knows what they are responsible for and where the limits of their authority are.

Manager-Managed LLC Operating Agreement

In a manager-managed LLC, one or more managers are given responsibility for running the company. The manager may be one of the LLC’s members or another person appointed to manage the business. The members can then take a less active role in day-to-day operations. The operating agreement should explain what the manager can decide independently and which matters still require member approval. For example, a manager might be allowed to handle ordinary contracts and business expenses, while major decisions such as taking on substantial debt, selling important assets, or admitting a new member still require approval from the owners.

These categories can overlap. A single-member LLC can also be manager-managed, and a multi-member LLC can choose either a member-managed or manager-managed structure. The important point is that the operating agreement should accurately reflect who owns the LLC, who manages it, and how decisions are made.

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How to Write a Texas LLC Operating Agreement

A template can give you a useful starting point, but writing a Texas LLC operating agreement involves more than filling in blanks. Before you choose or adapt a template, think through how your LLC will actually operate, who will make decisions, how ownership and money will be handled, and what should happen when circumstances change. A Texas LLC operating agreement example or template can help you identify the subjects you need to address. The problem begins when a generic template is treated as if it were automatically suitable for every LLC. Before using one, check whether it matches your situation:

A generic document may contain perfectly reasonable language while still solving the wrong problem. A two-member 50/50 business, for example, may need much more detail about deadlocks and buyouts than a single-member consulting company. A business expecting outside investors may need provisions that are irrelevant to a family-owned business. Use a template to identify the questions your agreement needs to answer, then adapt those answers to the way your business will actually operate. If you want a more detailed explanation of what an operating agreement typically contains, see our complete guide to LLC operating agreements. Once you know what your LLC needs, you can work through the agreement step by step.

Step 1: Confirm Ownership

Identify each member, their contributions, and the ownership arrangement.

Step 2: Decide Who Manages the LLC

Choose between member management and manager management, and make sure the agreement is consistent with your Certificate of Formation.

Step 3: Establish Decision-Making Rules

Decide which actions one person can take and which require approval from other owners.

Step 4: Address Money

Set rules for contributions, allocations, distributions, and financial authority. Get tax advice where necessary.

Step 5: Plan for Changes in Ownership

Consider what happens if someone joins, leaves, dies, becomes disabled, wants to sell, or has a serious dispute with another owner.

Step 6: Put the Agreement in Writing

Although Texas recognizes oral and implied company agreements, documenting your arrangement reduces the need to prove later what everyone supposedly agreed to.

Step 7: Review It When the Business Changes

Revisit the agreement after important events such as admitting a member, changing management, obtaining a major investment, restructuring ownership, or creating a series. An agreement that accurately described your three-person startup five years ago may no longer make sense after two investors and a new manager join.

Put the Right Agreement Behind Your Texas LLC

A Texas LLC operating agreement gives you a place to define how your company will actually work, from ownership and management to voting, distributions, transfers, and what happens when the business changes. Texas may not require you to file this document with the state, but putting these rules in writing can make your LLC much easier to manage and help avoid uncertainty later. If you are still setting up your business, IncParadise can help with Texas LLC formation, registered agent services, and operating agreement support, giving you a clearer path from forming the company to putting the right internal documents in place.

This article provides general information and is not legal or tax advice. An operating agreement can create substantial legal and financial rights among LLC owners, so businesses with complex arrangements should obtain advice appropriate to their circumstances.

Originally Published: December 2022 | Last Major Update: September 2026