When you set up a Texas LLC, someone needs the authority to sign business contracts, tax filings, and other important documents for running your limited liability company.
Member Managed Versus Appointed Manager
When forming a Texas LLC, you’ll have the option to designate a manager who can sign legal documents and handle other important duties. This is common where there are multiple members with one actively running the company while the others are passive investors.
Related Article: How To Set Up A Texas Business In Just A Few Steps
The other option is elect to have management decisions made by the members instead of appointing a manager. If you elect to do this, typically the LLC operating agreement will state who has to authority to do what, including signing legal documents.
Single Member Limited Liability Company
When your LLC only has a single equity member who is an individual, it’s that person who usually signs docs on behalf of the company. This is true whether or not stated in the operating agreement.
However, if the LLC’s single member is another business entity (e.g. another LLC or a corporation), it’s common to have one or more officers of the parent company have the power to sign contracts, etc. on behalf of the subsidiary LLC.
Related Article: LLC Operating Agreement – Why Limited Liability Company Members Should Use One
If identified in the subsidiary’s operating agreement, it’s usually by title (e.g. President) rather than the individual’s name who holds the position in the parent company. The reason for this is that the person who holds a title may change over time but the position will continue to carry the authority without having to amend the subsidiary LLC’s operating agreement..
Multi-Member Texas LLC
When your Texas limited liability company has more than one member, you can designate a manager as described above.
However, if LLC management is left to the members, you’ll usually find the operating agreement identifies which members can act on behalf of the company.
And, if one or more of those authorized members is another business entity, the entity will designate who has authority to act on its behalf as a member of the Texas LLC.
LLC Tax Issues
Both the IRS and the Texas Comptroller permit a written power of attorney (POA) that authorizes a taxpayer to designate a third party to do various things, including signing tax filings. The IRS’ power of attorney is Form 2848 (PDF file) and the State Comptroller’s limited POA is Form 01-137 (PDF file).
Where To Get Legal Help For Your Limited Liability Company
An experienced Texas business lawyer can set up your Texas LLC to handle these issues correctly.
Recommended Book: How To Form A Texas Limited Liability Company (by Business Attorney Mike Young)
And if you’ve already formed a Texas limited liability company, the attorney can answer your questions about who has authority to sign contracts and other legal docs.
