LLCs and Operating Agreements
Limited Liability Companies, known more commonly as LLCs, are a type of legal entity available to individuals who wish to form a business. LLCs are a unique type of entity because they combine characteristics of both partnerships and corporations. However, an LLC is more than just a combination of the characteristics of other entities. It also has its own unique advantage that is not necessarily characteristic of other legal business entities.
The Advantage of Flexibility
Unlike other business entities, which can be rigid in their structure and legal conditions, the LLC is granted a great amount of flexibility under the law. An LLC has the ability to set out its own governing rules in the Operating Agreement, a legal document that details how an LLC is to be run. This allows the members of an LLC to have more direct control over how their business is governed, which is an advantage unique to this type of entity.
Texas law provides default rules for how an LLC is to be run, but these almost always include the phrase “unless otherwise provided for in the operating agreement” and can be overridden by the governing rules specified by the members of the LLC. This gives the members the flexibility to decide what type of governance is most efficient for their company instead of being constrained by rigid state laws.
Contact Us
If you are considering starting a business, it may be in your best interest to consult with a Texas business formation professional to determine which entity is right for you. To learn more about LLCs and other forms of business enterprise, contact Texas Legal Entities today at 512-472-2431.
At any time, please feel free to ask us a question. It's FREE!