Importance of Operating Agreement for Texas LLCs
No, LLCs do not need an Operating Agreement to start doing business in Texas. This document, however, is essential. An Operating Agreement serves as a guideline for the LLC’s operations and provides a framework for resolving member disputes. It also protects their assets. Creating an Operating Agreement tailored to your business needs and compliant with Texas laws is a must-have. Though it is not required, there are benefits of entering a Single-Member LLC Operating Agreement. It assists in proving the LLC was separate from the member. This helps maintain liability protection.
Obtaining and Customizing an Operating Agreement
You can get an operating agreement template from online legal services, the Texas Secretary of State, or business lawyers. Using a template ensures it fits your business and complies with laws. Customize your own operating agreement using our free template. The Company Agreement refers to the Operating Agreement but they mean the same thing.
Protecting a Single-Member LLC in Texas
A single-member LLC in Texas provides limited liability protection. The owner’s personal assets are generally shielded from the company’s debts and legal liabilities.
To form a single-member LLC in Texas, file Articles of Organization with the Secretary of State, obtain an EIN from the IRS, and register with the Texas Comptroller. Follow state-specific requirements when naming and structuring your LLC.
Creating an operating agreement, while not required, is highly recommended. It assists in proving the LLC was separate from the member and helps maintain liability protection. You can find templates online from legal services, the SOS, or business lawyers.
As a single-member LLC, you must report all profits or losses on your personal tax return. The LLC itself does not pay taxes. Understand if your LLC will be taxed as a sole proprietorship or S-corp.
Texas recently amended its law to provide better charging order protection for single-member LLCs. This makes it harder for creditors to seize members’ personal assets and gives members more control.
Maintain compliance with regulations on sales, payroll, franchise taxes, and annual fees. Get legal advice when forming your LLC to ensure proper protections are in place as your business grows.