How to complete a LLC Operating Agreement in Texas

This document establishes the ownership structure, management rules, and operating procedures for your Texas limited liability company. You'll need this when forming your LLC, bringing in new members, applying for business loans, or opening commercial bank accounts.

- Your LLC's exact legal name as filed with the Texas Secretary of State and your file number - Each member's full legal name, address, ownership percentage, and initial capital contribution amount - Your LLC's principal business address in Texas and registered agent information - Federal Employer Identification Number (EIN) from the IRS - Documentation of any existing member loans, property contributions, or intellectual property transfers to the LLC

1. Fill in the formation basics including LLC name, formation date, Texas file number, principal office address, and registered agent details exactly as they appear on your Certificate of Formation. 2. List each member in the membership section with full legal names, addresses, capital contributions (cash and property), and ownership percentages. Verify these percentages total exactly 100 percent. 3. Complete the management structure section confirming member-managed status. In Texas, this means all members have authority to bind the LLC unless you specify voting thresholds for major decisions like taking loans, buying property, or admitting new members. 4. Define capital contribution requirements including initial contributions already made and any future capital calls. Specify whether members must contribute additional funds if called and consequences for refusing. 5. Document profit and loss allocation, typically matching ownership percentages unless you have a special arrangement. Include distribution timing and whether distributions require unanimous or majority vote. 6. Fill in the transfer and buyout provisions explaining restrictions on selling membership interests and valuation methods if a member wants to exit or dies. Texas law allows significant flexibility here. 7. Complete the dissolution section stating events that trigger winding up the LLC and how assets will be distributed. Address whether remaining members can continue the business. 8. Add Texas-specific clauses addressing state tax obligations and confirm the agreement complies with the Texas Business Organizations Code. 9. Have every member sign and date in the signature section. Texas does not require notarization for operating agreements, but some lenders prefer it.

- Banks scrutinize the capital contributions section to verify members have real money invested, not just sweat equity. Document every dollar contributed with bank statements or property appraisals. - Lenders want clear authority provisions showing who can sign loan documents and commit the LLC to debt. Ambiguous management language causes loan-application rejections. - Missing or mismatched ownership percentages between your operating agreement and loan application raises red flags. Keep these documents consistent and update both when membership changes.