Do You Need a Business Lawyer to Draft an Operating Agreement in Texas?

Starting a limited liability company (LLC) in Texas offers flexibility, liability protection, and tax advantages—but to truly protect your business, one critical step is often overlooked: drafting an operating agreement. While Texas law does not legally require LLCs to have one, skipping this document can create serious risks down the road. If you're forming a business in Austin, partnering with an experienced Austin business lawyer can help you avoid legal disputes, ensure compliance, and safeguard your investment.

What Is an Operating Agreement?

An operating agreement is a legal document that outlines the ownership structure, member roles, and operating procedures of an LLC. It defines how your business will be run, how profits will be distributed, how disputes will be resolved, and what happens if a member leaves or dies.

This agreement functions as a binding contract between the members of the LLC. It is especially important in multi-member LLCs but also provides crucial clarity for single-member businesses.

Without one, Texas defaults to the rules outlined in the Texas Business Organizations Code (BOC)—and those one-size-fits-all rules may not reflect your specific needs or intentions.

Is an Operating Agreement Required in Texas?

Technically, no. Texas does not require LLCs to file or maintain an operating agreement to be legally recognized. But here’s the catch: without one, any internal disputes or legal challenges will be resolved based on state default laws—which may not be favorable to you.

For example, if there is no operating agreement in place:

Ownership percentages may be presumed equal, regardless of each member's investment.

Management responsibilities and voting rights may be unclear.

There is no agreed-upon process for removing a member or dissolving the LLC.

Working with an Austin business lawyer ensures your agreement reflects your business’s specific goals and internal dynamics.

Key Provisions Every Operating Agreement Should Include

A properly drafted operating agreement typically includes the following provisions:

1. Ownership and Membership Interests

Clearly define who owns what percentage of the company, including how much capital each member contributed.

2. Management Structure

Outline whether the LLC is member-managed or manager-managed and define each member's duties.

3. Profit and Loss Distribution

Explain how the company’s profits and losses will be divided among members.

4. Voting Rights

Detail voting procedures, quorum requirements, and how major decisions are made.

5. Buyout and Exit Strategies

Include provisions for what happens if a member wants to leave, dies, or becomes incapacitated.

6. Dispute Resolution

Specify how internal disagreements will be resolved—whether through mediation, arbitration, or litigation.

7. Dissolution

Describe the process for voluntarily closing the business and distributing its remaining assets.

Having these terms clearly spelled out protects your business from conflict and ambiguity. A generic online template may miss crucial issues—especially for businesses operating in Texas. That’s where legal guidance makes a big difference.

Why Use an Austin Business Lawyer Instead of a Template?

There are plenty of free or low-cost operating agreement templates online, but these templates often fail to comply with state-specific laws or account for your business’s unique structure.

Here’s what an Austin business lawyer can provide that a template can’t:

Tailored Legal Language: Texas law has specific nuances regarding LLCs. A lawyer ensures the agreement aligns with local requirements and anticipates future legal needs.

Risk Mitigation: A generic template won’t identify potential legal liabilities or clarify unclear roles that could lead to lawsuits.

Clarity for Partners: If your LLC has multiple members, having a neutral attorney draft the agreement helps avoid misunderstandings and protects all parties involved.

Future-Proofing: A lawyer can draft flexible language that allows your business to grow, take on investors, or change management structures without rewriting everything.

Credibility with Banks and Investors: A formal operating agreement prepared by a professional lends legitimacy to your business when seeking financing or signing commercial leases.

What If You Already Formed an LLC Without an Operating Agreement?

If you’ve already filed your Certificate of Formation with the Texas Secretary of State but didn’t create an operating agreement, you’re not alone—and it’s not too late.

An experienced Austin business lawyer can help you:

Draft a new agreement that fits your current structure and needs.

Amend the agreement if your business has evolved since formation.

Ensure all members sign and agree to the terms to make it enforceable.

This is especially important if you've recently brought on new partners, restructured your business, or are preparing for growth or investment.

Real-World Consequences of Not Having an Operating Agreement

Without a written agreement, you’re putting your business at risk of:

Internal power struggles between members

Lawsuits over profit distribution or managerial duties

Inability to remove a non-performing partner

Delays or denials in opening a business bank account

Confusion during dissolution or sale of the company

Judges will fall back on Texas default rules in these cases—and those may not match the intentions or fairness expected by the parties.

Conclusion: Protect Your Business with a Custom Operating Agreement

An operating agreement isn’t just legal red tape—it’s a foundational document that protects your interests, minimizes conflict, and ensures your business runs smoothly. Whether you’re launching a new LLC in Travis County or refining an existing one, a knowledgeable Austin business lawyer can draft a legally sound, customized agreement that fits your business’s needs now and in the future.

Don’t rely on cookie-cutter templates. Invest in a legal partner who understands your goals, the law, and the risks of doing business in Texas.