It is important for all business owners in Florida to be aware of the LLC operating agreement. In fact, every single owner should have one to protect their LLC. While they aren’t legally required, an LLC sets forth rules and expectations whilst also adding credibility to your business. In this article, we will go through all of the essentials that you need to know about the LLC operating agreement.
What is an LLC Operating Agreement?
An LLC operating agreement is a legal document that outlines the ownership and financial structure of an LLC. It is distinct from the LLC formation documents. The purpose of an LLC operating agreement is to state the names of the ownership and provide their membership interest or ownership details. The agreement will also include specific details on profits, losses, taxes, and how all of this will be managed amongst members.
A copy of an LLC operating agreement may be requested when buying real estate, utilizing tax/accountancy professionals, negotiating with partners/investors, and when seeking legal advice. If legal action is taken against the LLC, then a court will most likely request a copy. In Florida, businesses are not legally mandated to have an LLC operating agreement so long as they follow the rules and regulations of the state. Even so, this legal document is vital for any LLC to provide transparency and clarity in all business matters.
Any changes made to an LLC operating agreement must be signed off by all members. If you are creating a new agreement, then you will need the formation documents before proceeding, since this will have the vital information needed for the agreement.
What is Included in an LLC Operating Agreement?
There are a number of topics that are usually included in an LLC operating agreement. The first relates to organization with regards to data of formation and details about the ownership. Additionally, voting powers, capital contributions, and distributions amongst members are also included. There should also be an outline as to how the structure would change if a member decided to leave the LLC and a plan for any potential dissolution where all members would decide to no longer run the business.
Florida LLC Law Limitations & Record-Keeping Requirements
Certain provisions may have limitations under Florida law. For example, the law states that an LLC operating agreement cannot take away duties of loyalty or care between business associates. Additionally, access to the LLC records cannot be put under restriction by any member. It is also legally mandated to keep records of the LLC at the business address. This includes financial records and tax returns, as well as any articles of organization.
You should now have a much clearer idea of what the LLC operating agreement in Florida entails. If you haven’t already got one, then we highly recommend you have one drafted as soon as possible. If you need help with creating or editing this agreement, then feel free to contact us for advice. We are able to work on your behalf to craft an agreement that is suitable for your requirements.