If you`re thinking about starting a business in Texas, you may have heard the term “sole member LLC.” A sole member LLC is a type of limited liability company that has just one owner, known as a “member.” This structure is common among small business owners who want to protect their personal assets and have flexibility in managing their company.
However, before you start operating your sole member LLC in Texas, it`s important to have an operating agreement in place. An operating agreement is a legal document that outlines the internal workings of your company, including management, ownership, financial arrangements, and more.
Here are some key elements to include in your sole member LLC operating agreement in Texas:
1. Company name and purpose: You should clearly state the name of your LLC and the purpose of your business. This could be a broad statement like “to engage in any lawful business activity,” or a more specific description of your products or services.
2. Member information: As a sole member LLC, you are the sole owner of the company. However, you should still include your full legal name and address in the operating agreement for clarity.
3. Management structure: In a sole member LLC, the member typically manages the company. However, you may want to specify any roles or responsibilities, such as hiring employees or delegating certain tasks to others.
4. Capital contributions: You should state how much money or assets you are contributing to the company, as well as any future contributions you plan to make. This helps establish the initial value of your company and gives you a basis for dividing profits and losses.
5. Profit and loss distribution: As the sole member, you are entitled to all profits and responsible for all losses. However, you may want to specify how and when profits will be distributed to you, as well as how losses will be allocated.
6. Voting rights and decision-making: Since you are the sole member, you have complete control over decision-making. However, you may want to outline any procedures for voting on major decisions, such as hiring or firing employees or entering into significant contracts.
7. Dissolution and transfer of ownership: Lastly, you should include provisions for dissolving the company or transferring ownership in the event that you want to sell or pass on your business to someone else.
Overall, a sole member LLC operating agreement in Texas is an important document that can help prevent disputes and provide legal protection for your business. It`s recommended to work with an experienced attorney to draft an agreement that meets your unique needs and complies with Texas state laws.