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Texas Professional Limited Liability Company Agreement

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SAMPLE COMPANY AGREEMENT
PROFESSIONAL LIMITED LIABILITY COMPANY

TX-PLLC-1

COMPANY AGREEMENT OF

A TEXAS PROFESSIONAL LIMITED LIABILITY COMPANY

THIS COMPANY AGREEMENT ("Agreement") is entered into the day of , 20 , by and between the following persons:

1.

2.

3.

4.

hereinafter, ("Members" or “Parties”).

FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby acknowledged, the Parties covenant, contract and agree as follows:

ARTICLE I

FORMATION OF LIMITED LIABILITY COMPANY

1. Formation of P.L.L.C. The Parties have formed a Texas professional limited liability company named ("P.L.L.C.").

2. Articles or Organization. The Members acting through one of its Members, , filed Certificate of Formation, ("Articles") for record in the office of the Texas Secretary of State on , thereby creating the P.L.L.C.

3. Business. The business of the P.L.L.C. shall be to engage in the practice of the State of Texas and in such other jurisdictions where legally allowed.

4. Registered Office and Registered Agent. The registered office and place of business of the P.L.L.C. shall be

and the registered agent at such office shall be . The Members may change the registered office and/or registered agent from time to time.

5. Duration. The P.L.L.C. will commence business as of the date the Members contribute their capital investment in the P.L.L.C. and will continue in perpetuity.

6. Fiscal Year. The P.L.L.C.'s fiscal and tax year shall end December 31.

ARTICLE II

MEMBERS

7. Members. All members, managers, and officers of the P.L.L.C. shall be licensed to practice in the State of Texas. The initial members of the P.L.L.C., their initial capital contributions, and their percentage interest in the P.L.L.C. are:

Initial Members / Percentage Interest in P.L.L.C. / Capital Contribution

8. Additional Members. New members may be admitted only upon the consent of a majority of the Members and upon compliance with the provisions of this agreement. All new members shall be licensed to practice in the State of Texas.

ARTICLE III

MANAGEMENT

9. Management. The Members have elected to manage the P.L.L.C. as follows:

The management of the P.L.L.C. shall be vested in the Members without an appointed manager...

The Members hereby delegate the management of the P.L.L.C. to Manager(s), subject to the limitations set out in this agreement.

g) There shall be initial Managers. All managers shall be licensed to practice in the State of Texas.

h) The initial Manager(s) is/are:

11. Member Only Powers. ... if the debt, expenditure, or other obligation exceeds $.

ARTICLE IV

CONTRIBUTIONS, PROFITS, LOSSES, AND DISTRIBUTIONS

17. Distributions. Distributions of cash or other assets ... shall be made in the total amounts and at the times as determined by a majority of the Members.

ARTICLE V

VOTING; CONSENT TO ACTION

23. Majority Defined. ...

ARTICLE VI

DUTIES AND LIMITATION OF LIABILITY MEMBERS, OFFICERS, AND PERSONS SERVING ON ADVISORY COMMITTEES; INDEMNIFICATION

27. Indemnification and Insurance.

ARTICLE VII

MEMBERS INTEREST TERMINATED

29. Termination of Membership. ...

(c) A Member dies or is disqualified from practicing in Texas.

ARTICLE VIII

RESTRICTIONS ON TRANSFERABILITY OF P.L.L.C. INTEREST; SET PRICE FOR P.L.L.C. INTEREST

33. Sale of Interest. ... if the total purchase price is in excess of $ ...

34. Set Price. ... The initial Set Price shall be adjusted no later than .

ARTICLE IX

OBLIGATION TO SELL ON A DISSOCIATION EVENT CONCERNING A MEMBER

35. Dissociation. ...

ARTICLE X

DISSOLUTION

36. Termination of P.L.L.C. ...

ARTICLE XI

TAX MATTERS

39. Tax Matters Partner. The Members hereby designate as the "tax matters partner" for purposes of representing the P.L.L.C. before the Internal Revenue Service if necessary.

ARTICLE XII

RECORDS AND INFORMATION

41. Records and Inspection. ...

ARTICLE XIII

MISCELLANEOUS PROVISIONS

52. Restriction on Membership and Transfer of Membership. All members shall at all times be licensed to practice in the State of Texas. No membership interest may be transferred to any person who is not licensed to practice in the State of Texas.

53. Disqualification of Members. In the event of the disqualification of a member to practice in the State of Texas...

55. Compliance with Law, Rules, and Regulations. The P.L.L.C. shall at all times be and remain in full compliance with all applicable rules and regulations and all statutory provisions applicable to a professional limited liability company and the practice of in the State of Texas.

WHEREFORE, the Parties have executed this Agreement on the dates stated below their signatures on the attached signature page for each individual Party.

NOTICE: EACH MEMBER HEREBY CERTIFIES THAT HE OR SHE HAS RECEIVED A COPY OF THIS COMPANY AGREEMENT AND FORMATION DOCUMENT OF , A TEXAS PROFESSIONAL LIMITED LIABILITY COMPANY.

Member signature

Member signature

Member signature

Member signature

Member signature

Member signature

Print Name of Member:

Address:

City, State, Zip:

Phone:

INDIVIDUAL ACCEPTANCE AND SIGNATURE PAGE

I, , hereby certify that I have received a copy of the Professional Limited Liability Company Agreement and Certificate of Formation of , a Texas professional limited liability company.

I realize that an investment in this Company is speculative and involves substantial risk. I agree to be bound by all of the terms and conditions of the Certificate of Formation and Professional Limited Liability Company Agreement of .

Member:

Address:

Date:

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What the Texas Professional Limited Liability Company Agreement Is

The Texas Professional Limited Liability Company Agreement is a legally binding operating agreement used by licensed professionals who form a professional limited liability company (PLLC) in Texas. It sets forth the company's purpose limited to authorized professional services, member roles and voting rights, capital contributions, profit and loss allocation, management structure, admission and withdrawal processes, and procedures for dissolution. The agreement supplements statutory requirements under Texas business entity law and governs internal relationships, professional liability limitations, and regulatory compliance for members who hold professional licenses.

Why a Clear Agreement Matters for Texas PLLCs

Provides a clear framework for governance, member responsibilities, and allocation of liabilities tailored to licensed professionals, helping reduce conflicts, document regulatory compliance, and clarify professional service limitations under state law.

Why a Clear Agreement Matters for Texas PLLCs

Who Uses This Agreement in Practice

Primary users include licensed professionals, firm managers, and attorneys drafting PLLC governance documents in Texas.

  • Physicians and healthcare groups establishing a Texas PLLC for clinical practice governance.
  • Attorneys forming ethics-compliant law PLLCs with member discipline and ownership restrictions.
  • Architects, engineers, and other licensed professions managing professional liability and ownership rules.

Also used by accountants, consultants, and administrative staff to operationalize billing, licensing verification, and member onboarding rules.

Representative Roles and Responsibilities

Managing Member

Managing members use the agreement to define authority, profit allocation, and responsibility for compliance. They rely on clear voting thresholds, decision-making rules, and buyout procedures to manage transitions and limit exposure to business liabilities while preserving professional standards.

Practicing Attorney

Attorneys and firm counsel draft or review PLLC agreements to ensure alignment with Texas professional regulations, conflict-of-interest rules, and client trust obligations. They incorporate governance clauses that satisfy bar requirements and protect individual lawyers' licensure and malpractice exposure.

Core Provisions to Include in Your Texas PLLC Agreement

Core provisions explain how the Texas Professional Limited Liability Company Agreement structures membership, management, liability allocation, and regulatory compliance for licensed professionals.

Purpose

Defines the professional services the PLLC may provide, limits the company to licensed practice areas, and records compliance obligations required by Texas regulatory authorities and licensing boards.

Membership

Specifies admission criteria, member capital contributions, ownership percentages, voting rights, transfer restrictions, and procedures to add or withdraw licensed members in compliance with professional rules.

Management

Sets whether the PLLC is member-managed or manager-managed, outlines manager duties, decision thresholds, authority for professional oversight, delegation limits, and reporting obligations to members and regulators.

Liability

Allocates limited liability protections among members for business debts and contracts while expressly stating that individual professional malpractice and disciplinary responsibility remain personal obligations of the licensed practitioner.

Dissolution

Describes dissolution triggers, buyout valuation and payment mechanics, winding-up procedures, apportionment of outstanding professional liabilities, creditor claims resolution, and member duties to notify licensing boards.

Amendments

Specifies amendment thresholds, approval voting requirements, notice procedures, recordation of amendments, and steps to ensure changes comply with professional licensing rules and statutory filing requirements.

Step-by-Step: Complete and Execute the Agreement

Follow these steps to complete and execute the Texas Professional Limited Liability Company Agreement accurately.

  • 01
    Gather documents: Collect licenses, formation certificate, and ID for each member.
  • 02
    Complete fields: Enter company name, member info, and governing state.
  • 03
    Review terms: Verify management, liability, and transfer provisions with counsel.
  • 04
    Sign and file: Obtain signatures, notarize if required, retain originals.

How to Configure an Online Signing Workflow

Configure an online workflow to collect eSignatures, attach required exhibits, set signer authentication, and store completed agreements securely.

Field Configuration
Document upload Use PDF or DOCX file
Signature fields Place signature, initials, date fields
Authentication Email link, SMS code, or KBA
Notifications Set signer reminders and completion alerts

Where to Send Executed Agreements and Copies

After execution, route the signed Texas PLLC Agreement to appropriate filing destinations and retain copies for compliance and audit purposes.

  • Secretary of State: File formation documents or amendments as required
  • Licensing boards: Provide copies to professional licensing authorities when required
  • Tax agencies: Keep copies for IRS reporting and state tax filings
  • Internal records: Store executed agreement and amendment history securely

Technical Requirements for eSubmission and Storage

Ensure your eSignature platform supports required authentication, audit trails, and secure storage before e-submitting the agreement.

  • File formats: PDF, DOCX, and PDF/A supported
  • Integrations: Salesforce, NetSuite, Microsoft 365
  • Security: TLS 1.2/1.3 and AES-256 encryption

eSignature Vendor Comparison for Executing Agreements

Comparison of common eSignature plan features important for executing and managing Texas Professional Limited Liability Company Agreements; vendor names are presented for feature parity.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial Varies by vendor Varies by vendor Varies by vendor Varies by vendor
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No

Key Deadlines and Filing Milestones

Key dates to track during and after PLLC formation include state filings, tax registrations, employer reporting, license renewals, and internal governance milestones.

Certificate of Formation filing:

File with Texas Secretary of State when creating PLLC.

EIN application:

Apply to IRS for employer identification number after formation.

Tax registrations:

Register for state franchise tax and sales tax accounts if applicable.

License renewals:

Follow professional board renewal cycles and reporting deadlines.

Operating meeting schedule:

Document initial organization meeting and annual member meetings.

Best Practices to Reduce Risk and Improve Clarity

Practical tips ensure the Texas Professional Limited Liability Company Agreement is clear, enforceable, and aligned with professional obligations and member expectations.

Use plain language and defined terms
Draft provisions in plain language, define capitalized terms consistently, and avoid ambiguous phrases. Clear definitions reduce disputes, enable consistent interpretation, and make regulatory review straightforward for licensing boards or counsel reviewing the agreement.
Coordinate with professional licensing rules
Cross-check agreement provisions against relevant Texas licensing rules and any specialty board standards. Address restrictions on ownership, practice scope, supervisory relationships, and reporting obligations to avoid conflicts between the operating agreement and regulatory requirements.
Specify dispute resolution and deadlock mechanisms
Include mediation and arbitration clauses, buy-sell or shotgun provisions, and clear valuation methods for member departures. Defined procedures reduce litigation risk and provide predictable remedies when professional partners disagree on governance or practice management.
Maintain separate practice insurance and bank accounts
Keep distinct professional liability insurance policies, bank accounts, and books for the PLLC. Avoid commingling personal funds, document expense allocations, and require proof of insurance from members to protect professional practice and limit corporate veil challenges.

Common Preparation Pitfalls to Avoid

  • Using handwritten or informal signatures without verifying intent or consent can create enforceability disputes and complicate audit trails under ESIGN or UETA.
  • Failing to define member capital contributions or valuation methods leads to ambiguity in buyouts and increases litigation risk among departing professionals.
  • Not aligning the agreement with professional board rules or neglecting to provide license numbers may trigger regulatory noncompliance and sanctions.
  • Relying solely on oral side agreements or failing to update the operating agreement after membership changes undermines enforceability and record accuracy.

Potential Consequences of an Incorrect or Incomplete Agreement

Invalid agreement: Operational disputes and unenforceability
License sanctions: Disciplinary actions by board
Personal liability: Malpractice remains individual
Tax penalties: IRS fines for misreporting
I-9 violations: Penalties per DHS rules
Recordkeeping failures: Loss of evidence for disputes

Example Scenarios: How Agreements Resolve Real Issues

Real-world examples show how a Texas PLLC agreement resolves governance, liability allocation, and member transitions in professional practices.

Small medical practice

A three-physician clinic forms a Texas PLLC and uses a tailored agreement to allocate management duties and malpractice coverage.

  • Set a clear buyout valuation formula.
  • The agreement specified valuation methods, required proof of individual malpractice insurance, and established mediation then arbitration for disputes, which minimized litigation and protected patient care continuity during member departures and transition planning.

Engineering firm

An engineering partnership converted to a Texas PLLC to formalize ownership percentages, assign IP rights, and limit business debts to the company.

  • Use assignment clauses to protect firm intellectual property.
  • The operating agreement required inventor assignment, established revenue sharing for project IP, and defined management authority for licensing technology, enabling the firm to pursue contracts without renegotiating partner contributions or ownership stakes.

Essential Information to Include for Compliance and Security

Company name: Exact legal name of PLLC
Registered agent: Texas registered agent and address
Professional purpose: Licensed services description in writing
Member list: Names, license numbers, capital contributions
Governing law: Choice of Texas law
Signature blocks: Signatures with printed name and date

Frequently Asked Questions About Texas PLLC Agreements

Answers to common questions about preparing, signing, and maintaining a Texas Professional Limited Liability Company Agreement, including eSignature, notarization, and compliance concerns.


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