Texas enacted its first LLC statute in 1994. The initial statute was referred to as the Texas Limited Liability Company Act. After several revisions, and a period in which both statues were in effect starting in 2006, the initial statute was completely replaced effective January 1, 2010 with the Texas Business Organizations Code ("TBOC"). Chapter 101 of the Texas Business Organizations Code Limited Liability Companies is where most of the relevant provisions are found here.

The record keeping requirements for LLCs is found at TBOC Sec. 101-501. It requires that certain specific documents must be kept. Additionally TBOC Sec. 101-502 provides that a member should be allowed "information regarding the business, affairs, and financial condition of the company that is reasonable for the person to examine and copy."

Best Practices for Record Keeping for a Texas LLC

The following records should be kept by any Texas LLC.

Formation and Organization Documents

1. A copy of the Certificate of Formation and all amendments to it. (TBOC Sec. 101-501 (a) (3) "a copy of the company's certificate of formation, including any amendments to or restatements of the certificate of formation;")
2. A copy of all written Company Agreements ever used. (TBOC Sec. 101-501 (a) (4) "if the company agreement is in writing, a copy of the company agreement, including any amendments to or restatements of the company agreement;")

Correspondence with the State

1. Any document filed with the State concerning the LLC;
2. Any document received from the State concerning the LLC.

Financial Documents

1. A copy of all federal, state, and local income tax returns for each year; (TBOC Sec. 101-501 (a) (2) "a copy of the company's federal, state, and local tax information or income tax returns for each of the six preceding tax years;" )
2. A copy of any financial statements from at least the last three years.

Documents Related to the Internal Operation of the LLC

1. A copy of the minutes, if any, of each meeting of members and of any written consents obtained from members; (TBOC Sec. 3.151 (a) "Each filing entity shall keep: (2) minutes of the proceedings of the owners or members or governing authority of the filing entity and committees of the owners or members or governing authority of the filing entity;" except TBOC Sec. 3.151 (c) "The records required by Subsection (a)(2) need not be maintained by a limited partnership or a limited liability company except to the extent required by its governing documents.")
2. Any document which discusses the amount of capital contributions of each member in terms of cash or agreed value of other property or services contributed; (TBOC Sec. 101-501 (a) (7) "except as provided by Subsection (b), a written statement of: (A) the amount of a cash contribution and a description and statement of the agreed value of any other contribution made or agreed to be made by each member;" )
3. Any document which discusses the details of events, times, or other agreements made for further contributions to be made from members, if any; (TBOC Sec. 101 (a) (7) "except as provided by Subsection (b), a written statement of: (B) the dates any additional contributions are to be made by a member; (C) any event the occurrence of which requires a member to make additional contributions;")
4. Any document which discusses the share of profits and losses due each member; (see TBOC Sec. 101.502 (a) "A member of a limited liability company . . . on written request and for a proper purpose, may examine and copy at any reasonable time and at the member's or assignee's expense: . . . (2) other information regarding the business, affairs, and financial condition of the company that is reasonable for the person to examine and copy.")
5. Any document which discusses any right of a member to receive distributions of funds; (see TBOC Sec. 101.502, above)
6. Any document which discusses any right of a manager to make distributions of funds to a member; (see TBOC Sec. 101.502, above)
7. Any document which discusses each member's respective voting rights; (see TBOC Sec. 101.502, above)
8. Any document which discusses the details of events that would cause the LLC to be dissolved and its affairs wound up, if any. (TBOC Sec. 101-501 (a) (7) "except as provided by Subsection (b), a written statement of: (D) any event the occurrence of which requires the winding up of the company;")

Records of Members and Managers

1. A current list of the full names and last known address of all past and present members. (TBOC Sec. 101.501 (a) "a limited liability company shall keep at its principal office in the United States, or make available to a person at its principal office in the United States not later than the fifth day after the date the person submits a written request to examine the books and records of the company under Section 3.152(a) or 101.502: (1) a current list that states: (A) the percentage or other interest in the limited liability company owned by each member; and (B) if one or more classes or groups of membership interests are established in or under the certificate of formation or company agreement, the names of the members of each specified class or group;")
2. A current list of the full names and last known addresses of all past and present managers.

Other LLC Business-Related Information

Under TBOC Sec. 101-502 a member should be allowed "information regarding the business, affairs, and financial condition of the company that is reasonable for the person to examine and copy." Just what is reasonable obviously depends on the circumstances.

Location of Records

The above documents and records should be available at the principal business office maintained by the LLC within the United States, not necessarily in Texas. (TBOC Sec. 101-501 (c) "A limited liability company shall keep at its registered office located in this state and make available to a member of the company on reasonable request the street address of the company's principal office in the United States in which the records required by this section and Section 3.151 are maintained or made available.")

Form of Records

The documents and records may be maintained either in hard copy or electronically, as long as the electronic version can be printed within a reasonable period of time. (TBOC Sec. 3.151(b) "The books, records, minutes, and ownership or membership records of any filing entity, including those described in Subsection (a)(4), may be in written paper form or another form capable of being converted into written paper form within a reasonable time.")

Other Records

The above records are just the documents and records that are required to be kept as to the form of business. Many other records, for example records required to prepare tax returns, records required to be kept on employees, etc., are also required to be kept by an LLC, just as they are required for businesses operating in other forms.

The After Incorporation Tools

After Incorporation's tools are specifically designed to aid companies to comply with these requirements. Using our tools, your records are not only organized properly, but they can easily be made available to your Members and others required to be given access under these laws. You will also find the forms and templates you need to create the documentation to meet these requirements.