A Florida LLC operating agreement is a document formed by members or owners of a Limited Liability Company.
It outlines how an entity is run, each member’s responsibility, how management is structured, how profits are shared, and other aspects regarding its operations.
In Florida, companies that opt to run without an operating agreement are subject to state-set default management rules and regulations indicated in the Revised Limited Liability Company Act. These defaults rules are general in nature and may not be applicable in LLCs owned by unrelated members or where the sole aim is to provide legal protection to member assets.
LLCs in Florida are not required to create an operating agreement; however, its formation is recommended.
The following are legal statutes about a Florida LLC operating agreement:
- Florida Revised Limited Liability Company Act: Chapter 605
- Operating agreement laws: § 605.0105
- State Definition: § 605.0102(45)
There are several instances when a Florida LLC operating agreement may be helpful to a business, such as when title companies are purchasing real estate, when seeking financial support from tax and accounting professionals, when encouraging investment into the business by investors or partners, and when seeking legal counsel from lawyers.
Agreement Template
Creating an operating agreement can be expensive and time-consuming; that is why we are providing you with free downloadable Florida LLC operating agreement templates. These templates are easy to use and ensure that all relevant information regarding your LLC is captured.
The format found in the following Florida LLC operating agreement templates ensures that your entity’s details are well laid out.
Types of the Agreement
A Florida LLC operating agreement may either be a multi-member or single-member LLC.
Florida Single Member LLC Operating Agreement
An entity with a sole proprietor or owner uses a single-member LLC operating agreement. It helps separate an owner’s assets from the business and ensures the operation’s practices are well laid out in writing.
Download: Microsoft Word (.docx)
Florida Multi Member LLC Operating Agreement Template
A multi-member LLC operating agreement is designed for entities with more than one owner. It helps designate various management and operating procedures for members/owners.
Download: Microsoft Word (.docx)
Importance of the Agreement
A Florida LLC operating agreement plays a vital role in formalizing how an entity is run and its governing structures, therefore, helping the business show banks and lenders that its operations are well organized. It also helps form a legitimate perception of the business in the eyes of investors or partners that may request to see an operating agreement.
The operating agreement protects the personal assets of LLC members or owners in a lawsuit against the entity. Foreseeable conflicts among members are also reduced as responsibilities, roles, and expectations are well outlined in writing.
The Florida LLC operating agreement also helps protect the LL status of the entity, therefore, ensuring that it is not subject to default rules and regulations set by state law. Operating agreements ensure that entities form management structures and operation policies that best suit their interests.
Information to be Included
While businesses are free to structure the Florida LLC operating agreement in ways they deem best, the document’s contents must cover vital elements. The elements covered by the operating agreement ensure that all aspects of the business’s operations are captured in writing.
The following are elements that should be included in the Florida LLC operating agreement:
LLC’s business information: The official name, address, purpose served by the business, and duration of the LLC should be indicated in the operating agreement.
Name and address of the registered agent/office: A registered office/agent will accept legal correspondence on behalf of the LLC.
Name of members/owners, ownership percentage, and capital contribution: The ownership percentage and economic interests should be mentioned.
The selected management structure: A business can opt to use a member-managed or manager-managed structure per need.
Duties and authorities of each member and manager: The tasks of each member and manager and their exercisable authority to take decisions within the LLC should be stipulated in the Florida LLC operating agreement.
Voting rights, procedures, and requirements: Information on who can vote, how voting shall be conducted, and requirements for members to vote should be spelled out in the operating agreement.
Distribution of profits: The Florida LLC operating agreement should indicate how profits made by the entity will be split among its members.
Buyouts and buy-sell procedures: The operating agreement should outline how members can transfer LLC interests to third parties, how they can price their shares, and the procedures that will be used to add or remove members.
Meeting information: The Florida LLC operating agreement can indicate how often members should hold meetings, who can call for meetings, and the issues that shall be discussed.
Procedures for succession planning: Information on what happens to a member’s economic interests in the event of death and the rights of their successors should be indicated.
Dissolution procedures and policies: The Florida LLC operating agreement should outline how the decision to wind down the business should be made and what procedures and policies will guide the dissolution process.
Customized provisions by Florida that protect members’ assets: The LLC operating agreement should contain information on the various laws and provisions stipulated by the state to protect LLC member assets.
Usage of Agreement
There are two ways in which a Florida LLC operating agreement can be used to protect assets. They include protecting members’ assets from claims filed against the LLC in court and protection from claims made against LLC members.
When used to protect claims made against the LLC, the operating agreement ensures that liability related to the business is only limited to the assets of the LLC, where judgment can be found in favor of a claimant.
Therefore, members’ assets are not exposed to the LLC’s liabilities as they are separate from the business. Members with multiple investment assets are advised to separate each asset from the LLCs’ to benefit from this protection.
Some exceptions apply to the protection from claims made in court; they include when members use their assets to guarantee the LLC and when the LLC is found to have only been established to defraud creditors. In both of these instances, members’ assets can be used to cover the liabilities of the LLC.
The Florida LLC operating agreements can also be used to protect LLC members from claims made on their primary assets by their creditors. Florida laws ensure that limits are placed on lien charges against LLC distribution of debtor members’ interests. The terms and conditions outlined in Florida LLC operating agreement will determine the extent of this protection’s enforceability.
Oral and Free Operating Agreement
Florida has statutes that explicitly state that an operating agreement can be made orally in whole or in part or be implied by conduct. This, therefore, means that LLCs operating in the state of Florida doesn’t need to write an operating agreement.
Businesses that form oral operating agreements can save time and legal costs that come with drafting the document. However, members of these businesses risk misunderstandings and conflicts brought about by misinterpretation of the oral agreement or difficulty recalling details of terms agreed.
Newly formed LLCs with members who wish to avoid the risks posed by oral agreements can opt to use free operating agreements if they cannot afford a customized agreement made by a lawyer.
A free operating agreement is inexpensive and straightforward. It can be used in instances where members are related and have no credit concerns when there is a trust of conflict resolution among members in the event of disagreements, where members have equal economic investment and do not anticipate significant business growth, and where members are not worried about protection of membership interests from creditors.
Florida LLC
When forming an LLC in Florida, specific legal considerations should be made by the business members. The legal considerations made ensure that LLCs operate within the state stipulated laws and requirements. The following are two legal considerations that should be made when starting an LLC:
Limitations
Florida has put in place laws concerning the formation and operation of an LLC that restrict which provisions can be included in LLC owner’s operating agreements. However, anything the law does not regulate is at the discretion of LLC members.
The Florida State Statute Section 608.423(2), for instance, contains limitations that say the LLC operating agreement is not allowed to eliminate the duties, care, and loyalty between business associates, access to LLC records, or restrictions of the rights of an individual that is not a manager or member of the LLC.
For example, suppose the LLC is run by a manager(s); Florida laws allow an emergency operating agreement to be used by a business when its managers are unavailable because of a catastrophe.
Record-keeping requirements
Florida state laws also require LLCs to keep written records and documents at their registered place of business, even when they have an operating agreement. The records required include financial records, the Articles of Organization, and tax returns. In addition, the copies of all documents filed with the Secretary of State must also be maintained by Florida LLCs.
How to Form an LLC in Florida?
When forming an LLC in Florida, businesses are required to follow a well-outlined step-by-step process. The process helps ensure that the LLC is compliant with all legal requirements within the state. Requirements such as conducting a preliminary search of an available LLC name in the Division of Corporation’s records should first be met.
An LLC can make inquires by name, registered agent, and trademark name to ensure that multiple search options are used. The following requirements must also be met:
Registered agent
The LLC members must start by nominating a registered agent who will receive annual correspondents and other critical documents on the LLC’s behalf. The individual or business nominated must be a resident of the state of an entity actively operating within the state.
Entity type
Secondly, the LLC must indicate the entity’s type in the application document it submits to the Division of Corporations. This should indicate the type of LLC created by members. Foreign (expand a preexisting LLC) and domestic (form a new LLC) must ensure they check and confirm which application documents they are required to file.
For instance, a foreign LLC’s filing package will be required to have an attached Certificate of Existence issued by the initial jurisdiction the LLC was created that is no more than 90 days old.
Filing fee
Thirdly, LLCs will be required to pay a filing fee. LLCs filing online will be required to pay a fee of $125 via credit card, while those filling via mail will be required to attach a check payable to the Florida Department of State. The complete filing package should be sent to the
Division of Corporations, Registration Section, PO Box 6327, Clifton Building Tallahassee, FL32314.
Operating agreement
Next, an operating agreement should be created to outline the operations and management structure of the LLC. All LLC members should sign the operating agreement. Operating agreements are internal documents and hence must be kept by the LLC. The agreement, therefore, does not need to be submitted to the Division of Corporations.
Employment Identification Number
Finally, the LLC members must apply for an Employment Identification Number (EIN) immediately after filing their documents. The EIN plays an essential role in enabling the LLC to perform specific legal transactions such as opening company bank accounts and procurement of company credit cards. It also enables LLCs to pay their employees. Application for the EIN can be made online or via mail.
Frequently Asked Questions
The operating agreement is not the same as the Article of Organization. An Article of Organization is a formation document used to create the LLC that is filed with the Florida State Department. On the other hand, operating agreements are internal documents that outline the operation and management structure of the LLC.
The operating agreement does not require filing with the state. However, a copy of it is kept with other crucial company records. Each member of the LLC should have a copy of the operating agreement. Only documents required by the state, such as an Article of Organization, should be filed with the Florida State Department.
A lawyer is not required when creating an LLC operating agreement; however, it is advisable to consult legal counsel. The legal counsel will help members identify aspects they may have forgotten to include. A lawyer will also help advise members on legal terms and options that would best suit the LLC.
