If you`re starting a business in Texas, setting up a limited liability company (LLC) is a popular choice for many entrepreneurs. But before you can officially form an LLC, you need to create a Texas LLC member agreement.
A member agreement is a legally binding document that outlines the rights and responsibilities of each member of the LLC. It`s essential to have this agreement in place to ensure that everyone is on the same page and that any disagreements can be resolved quickly and fairly.
Here are some key elements to consider when drafting a Texas LLC member agreement:
1. Contributions and ownership: The agreement should specify what each member is contributing to the LLC in terms of money, property, or services. It should also outline each member`s ownership percentage in the company.
2. Voting rights: The member agreement should state how voting rights are allocated among members. Will each member have an equal vote, or will voting be based on ownership percentage?
3. Management: The agreement should outline how the LLC will be managed. Will it be managed by the members themselves, or will there be designated managers?
4. Profit and loss distribution: The agreement should specify how profits and losses will be distributed among members. This can be based on ownership percentage or a different formula, depending on what the members agree upon.
5. Transfer of ownership: The agreement should outline the process for transferring ownership of the LLC. This could include restrictions on who can become a member and how ownership can be transferred.
6. Dissolution: The agreement should specify how the LLC can be dissolved if necessary. This could include a vote among members or other procedures.
It`s important to have a Texas LLC member agreement in place from the beginning to avoid potential conflicts down the road. It`s also a good idea to have a lawyer review the agreement to ensure that it complies with Texas state laws and covers all necessary elements.
In summary, if you`re forming a Texas LLC, creating a member agreement is an important step in ensuring that everyone is on the same page and that the company operates smoothly. By including the elements outlined above and seeking legal advice as needed, you can create a strong foundation for your LLC and set it up for success.