Single-Member LLC Operating Agreement — Texas

Single-Member LLC Company Agreement (Texas)

Quick-Reference Summary

COMPANY AGREEMENT OF [LLC NAME], LLC

A Texas Single-Member Limited Liability Company

This Company Agreement (this "Agreement") is entered into and effective as of [__/__/____] (the "Effective Date") by [________________________________] (the "Sole Member"), being the sole member of [LLC NAME], LLC, a Texas limited liability company (the "Company").

The Sole Member, intending to be legally bound and to confirm the governance, capital, and operational arrangements of the Company under the Texas Business Organizations Code, Chapter 101 (the "Act"), adopts this Agreement as the Company's company agreement within the meaning of Tex. Bus. Orgs. Code § 101.001(1).

Article I — Formation

1.1 Formation. The Company was formed as a Texas limited liability company on [__/__/____] by filing a Certificate of Formation (Form 205) with the Texas Secretary of State pursuant to Tex. Bus. Orgs. Code §§ 3.001 and 101.051. The Secretary of State's file number assigned to the Company is [________________________________].

1.2 Name. The name of the Company is [LLC NAME], LLC. The name complies with Tex. Bus. Orgs. Code § 5.056 (must contain "Limited Liability Company," "Limited Company," or an acceptable abbreviation such as "LLC," "L.L.C.," "LC," or "L.C.").

1.3 Registered Office and Registered Agent. The Company's registered office in Texas is [________________________________], and its registered agent is [________________________________]. The agent has consented in writing to serve pursuant to Tex. Bus. Orgs. Code § 5.2011.

1.4 Principal Office. The principal office of the Company is [________________________________].

1.5 Term. The Company commenced on the effective date of the Certificate of Formation and shall continue until terminated pursuant to Tex. Bus. Orgs. Code Chapter 11 and Article VII of this Agreement.

1.6 Single-Member Validity. Pursuant to Tex. Bus. Orgs. Code § 101.052(c), this Agreement is not unenforceable solely because only one person is a party to it.

Article II — Purpose and Powers

2.1 Purpose. The Company is formed to engage in any lawful business for which a limited liability company may be organized under the Act, including without limitation: [________________________________].

2.2 Powers. The Company has and may exercise all powers under Tex. Bus. Orgs. Code §§ 2.101–2.104 and 101.052, including the powers to sue and be sued; to own and convey real and personal property; to contract; to borrow and lend; to act as a partner, joint venturer, or member of another entity; and to do every act necessary or convenient to the conduct of its business.

2.3 No General Partnership Inference. No provision of this Agreement shall be construed as making the Sole Member a partner of, or general partner with, any other person.

Article III — Member (Sole Member)

3.1 Identification of Sole Member. The sole member of the Company on the Effective Date is:

3.2 Initial Capital Contribution. The Sole Member's initial capital contribution is described in Exhibit A (Initial Capital Contribution). The agreed value of the contribution is $[____________].

3.3 Additional Capital Contributions. The Sole Member is not required to make additional capital contributions but may do so at any time. Any additional contributions shall be recorded on the Company's books and reflected on Exhibit A.

3.4 Membership Interest. The Sole Member holds 100% of the membership interest (as defined in Tex. Bus. Orgs. Code § 1.002(54)), including all governance rights and the entire economic interest.

3.5 Admission of Additional Members. Admission of an additional member requires (a) a written amendment to this Agreement or a written joinder, and (b) compliance with Tex. Bus. Orgs. Code § 101.103.

Article IV — Management

4.1 Member-Managed. The Company is a member-managed limited liability company under Tex. Bus. Orgs. Code § 101.251(1). The management of the Company is reserved exclusively to the Sole Member.

4.2 Authority of Sole Member. Subject only to limitations imposed by the Act or this Agreement, the Sole Member has full and exclusive authority to manage the business and affairs of the Company and to act for and bind the Company, including without limitation the authority to:

• (a) execute contracts, leases, deeds, notes, security agreements, guarantees, and other instruments;
• (b) open and maintain bank, brokerage, and merchant accounts;
• (c) employ and discharge agents, employees, attorneys, accountants, and other professionals;
• (d) acquire, dispose of, lease, encumber, and license Company assets;
• (e) commence, defend, settle, and compromise litigation, arbitration, and administrative proceedings;
• (f) elect or change the Company's federal tax classification on IRS Form 8832 or Form 2553; and
• (g) take all other actions appropriate to the conduct of the Company's business.

4.3 Officers (Optional). The Sole Member may designate officers (e.g., President, Vice President, Secretary, Treasurer) under Tex. Bus. Orgs. Code § 101.254. Officers serve at the pleasure of the Sole Member and have the authority delegated in writing.

4.4 Standards of Conduct. The Sole Member's duties to the Company are as provided in Tex. Bus. Orgs. Code § 101.401. To the maximum extent permitted by Tex. Bus. Orgs. Code §§ 7.001 and 101.401, the Sole Member's duties are expanded, restricted, or eliminated as follows: because the Company has only one member, the Sole Member has no duty to refrain from competition with the Company or from engaging in transactions in which the Sole Member has a personal interest.

4.5 Limitation of Liability; Indemnification. To the fullest extent permitted by Tex. Bus. Orgs. Code §§ 7.001 and 8.001 et seq., the Sole Member, and any officer or agent designated by the Sole Member, shall not be liable to the Company for any action taken or omitted in good faith, and shall be indemnified and held harmless by the Company against any claim, loss, liability, damage, or expense (including reasonable attorney fees) arising from any act or omission performed or omitted in good faith on behalf of the Company.

Article V — Capital Accounts, Allocations, and Distributions

5.1 Capital Account. A capital account shall be maintained for the Sole Member in accordance with Treas. Reg. § 1.704-1(b)(2)(iv) to the extent applicable to a disregarded entity.

5.2 Distributions. Distributions of cash or property shall be made to the Sole Member at such times and in such amounts as the Sole Member determines, subject to the solvency limitation of Tex. Bus. Orgs. Code § 101.206 (no distribution if it would render the Company unable to pay its debts as they become due in the usual course of business or if total liabilities would exceed total assets).

5.3 Federal Tax Classification. The Company shall be classified as a disregarded entity for federal income tax purposes under Treas. Reg. § 301.7701-3 unless and until an election is made on IRS Form 8832 or Form 2553. All items of income, gain, loss, deduction, and credit shall be reported on the Sole Member's federal income tax return.

5.4 Texas Franchise Tax. Regardless of federal classification, the Company is a "taxable entity" under Tex. Tax Code Ch. 171 and is subject to the Texas franchise tax and the Public Information Report or Ownership Information Report requirements, as further described in Section 8.2.

Article VI — Transfer of Interest and Charging Orders

6.1 Transfer of Membership Interest. The Sole Member may assign, sell, pledge, encumber, or otherwise transfer all or any portion of the Sole Member's membership interest in accordance with Tex. Bus. Orgs. Code § 101.108. Admission of a transferee as a member requires compliance with Section 3.5 of this Agreement.

6.2 Charging Order — Exclusive Remedy. Under Tex. Bus. Orgs. Code § 101.112(d), the entry of a charging order is the exclusive remedy by which a judgment creditor of the Sole Member or of any other owner of a membership interest may satisfy a judgment from the judgment debtor's membership interest.

6.3 No Foreclosure. Tex. Bus. Orgs. Code § 101.112(c) provides that a charging order constitutes a lien on the judgment debtor's membership interest but "may not be foreclosed on under this code or any other law." The Sole Member therefore retains the membership interest subject only to a charging order, and a creditor may not compel sale of the interest or admission as a member.

6.4 Creditor's Rights Limited to Distributions. A judgment creditor holding a charging order has only the right to receive any distribution to which the judgment debtor would otherwise be entitled in respect of the membership interest (§ 101.112(b)). The creditor does not have any right to obtain possession of, or to exercise legal or equitable remedies with respect to, the property of the Company (§ 101.112(f)).

6.5 Single-Member Application. Tex. Bus. Orgs. Code § 101.112(g) expressly provides that the charging-order provisions of § 101.112 apply to both single-member and multiple-member limited liability companies.

6.6 Exemption Laws Preserved. Nothing in this Agreement deprives the Sole Member of the benefit of any exemption laws applicable to the membership interest (§ 101.112(e)).

Article VII — Winding Up and Termination

7.1 Events Requiring Winding Up. The Company shall wind up its business and affairs upon the first to occur of the following, pursuant to Tex. Bus. Orgs. Code § 11.051 and § 101.552:

• (a) the expiration of the period of duration, if any, stated in the Certificate of Formation;
• (b) the written election of the Sole Member to wind up;
• (c) the occurrence of any event specified in the Certificate of Formation or this Agreement as causing winding up;
• (d) the entry of a decree requiring winding up under Tex. Bus. Orgs. Code § 11.054; or
• (e) involuntary termination by the Secretary of State under Tex. Bus. Orgs. Code § 11.251.

7.2 Continuation by Successor. Under Tex. Bus. Orgs. Code § 101.552(b), the Company is not required to wind up solely because the Sole Member's membership ceases. Any successor in interest (including a personal representative) may continue the Company by causing a successor member to be admitted within 90 days.

7.3 Procedure. Winding up shall be conducted in accordance with Tex. Bus. Orgs. Code §§ 11.052–11.053. The Sole Member (or a court-appointed person) shall: (a) collect Company assets; (b) discharge or make provision for Company liabilities; (c) distribute remaining property to the Sole Member under § 101.206 and § 101.555; and (d) file a Certificate of Termination (Form 651) with the Secretary of State pursuant to Tex. Bus. Orgs. Code § 11.101.

7.4 Tax Clearance. Before filing the Certificate of Termination, the Company shall obtain a Certificate of Account Status from the Texas Comptroller of Public Accounts evidencing that all franchise taxes have been paid (Tex. Tax Code § 171.255).

Article VIII — Texas-Specific Provisions

8.1 Filing of Certificate of Formation. The Company was formed by filing Form 205 with the Texas Secretary of State; the filing fee was $300 (Tex. Bus. Orgs. Code § 4.151). Any amendment is filed on Form 424.

8.2 Franchise Tax and Public Information Report.

• (a) The Company is subject to the Texas franchise tax under Tex. Tax Code Ch. 171, computed on the taxable margin.
• (b) Even if the Company's annualized total revenue is at or below the no-tax-due threshold, the Company shall file a Public Information Report (PIR) or Ownership Information Report (OIR) with the Texas Comptroller of Public Accounts by May 15 of each year, or such other date prescribed by the Comptroller.
• (c) Failure to file the PIR/OIR may result in forfeiture of the Company's right to transact business and may make the Sole Member personally liable for certain Company debts under Tex. Tax Code §§ 171.251–171.255.

8.3 Series LLC Election (Optional). Texas authorizes Series LLCs under Tex. Bus. Orgs. Code §§ 101.601–101.636. The Company is [NOT a Series LLC / a Series LLC]. If the Company is or becomes a Series LLC:

• (a) the Certificate of Formation must contain the series-authorizing language required by § 101.602(a)(2);
• (b) the Company shall maintain records that account for the assets and liabilities of each series separately from the assets and liabilities of any other series and of the Company, as required by § 101.603;
• (c) each protected series enjoys statutory limitations on liability under § 101.605 only if the recordkeeping requirements of § 101.602(b) are continuously satisfied; and
• (d) a registered series may be formed by filing a Certificate of Registered Series (Form 312) and paying the $300 fee per registered series.

8.4 Member-Manager Default; Optional Manager-Management. Texas's default is member-management (Tex. Bus. Orgs. Code § 101.251). To switch to manager-management, the Certificate of Formation must so state and this Agreement must be amended to designate the manager.

8.5 Nonwaivable Provisions. This Agreement may not, and shall not be construed to, do any of the things prohibited by Tex. Bus. Orgs. Code § 101.054, including (without limitation) eliminating the implied contractual covenant of good faith and fair dealing, varying the requirement to wind up under § 11.051(4)–(5), or restricting the rights of a person other than a member or manager under the Code.

8.6 Notice of Registered Agent Change. Any change of registered agent or registered office shall be filed with the Secretary of State on Form 401 within the time required by Tex. Bus. Orgs. Code § 5.202.

Article IX — General Provisions

9.1 Amendment. This Agreement may be amended only by a writing signed by the Sole Member.

9.2 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, without regard to its conflict-of-laws rules.

9.3 Venue. Any action arising out of or relating to this Agreement or the Company shall be brought exclusively in the state or federal courts located in [________________________________] County, Texas.

9.4 Severability. If any provision is held invalid or unenforceable, the remainder of this Agreement shall remain in full force and effect.

9.5 Integration. This Agreement, together with the Certificate of Formation, constitutes the entire agreement of the Sole Member with respect to the Company.

9.6 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts and by electronic signature in accordance with the Texas Uniform Electronic Transactions Act, Tex. Bus. & Com. Code Ch. 322.

9.7 Books and Records. The Company shall maintain the records required by Tex. Bus. Orgs. Code § 101.501 at its principal office.

Signature Block

IN WITNESS WHEREOF, the undersigned Sole Member has executed this Company Agreement as of the Effective Date.

The Company joins in this Agreement to evidence its acceptance of the terms hereof:

[LLC NAME], LLC

By: [________________________________]
Name: [________________________________]
Title: Sole Member

Exhibit A — Initial Capital Contribution

Pre-Execution Checklist

☐ Certificate of Formation (Form 205) filed with Texas Secretary of State; $300 filing fee paid
☐ Secretary of State file number recorded in Section 1.1
☐ Federal EIN obtained from IRS (Form SS-4 / online)
☐ Texas registered agent designated and written consent obtained (Tex. Bus. Orgs. Code § 5.2011)
☐ Initial capital contribution funded and recorded on Exhibit A
☐ Separate Company bank account opened in the Company's legal name
☐ Federal tax classification confirmed (default disregarded entity; Form 8832 / 2553 filed if electing otherwise)
☐ Texas Comptroller WebFile account created; franchise-tax calendar set
☐ Public Information Report / Ownership Information Report calendar set (May 15 annually)
☐ Series LLC election decision documented (if applicable) and series-authorizing language included in Certificate of Formation
☐ Business licenses, sales-tax permits, and local registrations obtained
☐ Company Agreement executed and retained at principal office under § 101.501
☐ Foreign-state qualifications considered if transacting business outside Texas

Sources and References

• Texas Business Organizations Code, Chapter 101 — https://statutes.capitol.texas.gov/Docs/BO/htm/BO.101.htm
• Tex. Bus. Orgs. Code § 101.112 (Charging order) — https://statutes.capitol.texas.gov/Docs/BO/htm/BO.101.htm#101.112
• Tex. Bus. Orgs. Code §§ 101.601–101.636 (Series LLC) — https://statutes.capitol.texas.gov/Docs/BO/htm/BO.101.htm#101.601
• Texas Secretary of State, Form 205 (Certificate of Formation — LLC) — https://www.sos.state.tx.us/corp/forms/205_boc.pdf
• Texas Secretary of State, Form 651 (Certificate of Termination) — https://www.sos.state.tx.us/corp/forms_boc.shtml
• Texas Comptroller, Franchise Tax PIR/OIR — https://comptroller.texas.gov/taxes/franchise/pir-oir-filing-req.php
• IRS Single-Member LLC guidance — https://www.irs.gov/businesses/small-businesses-self-employed/single-member-limited-liability-companies