When entrepreneurs choose to form an LLC, they generally do so because it offers strong liability protection and less formality than a corporation.
However, many business owners do not realize that an LLC does not need to have an operating agreement. They may wonder whether they are legally required to create one.
Articles of Organization
The Articles of Organization are the first document you must file with the state to establish your limited liability company. They include basic information about your business, like the name of your LLC, the registered agent, and the address of your principal office.
If you are a Florida LLC, your Articles of Organization must be filed with the Division of Corporations. You can submit them online or by mail.
During the filing process, you must certify that your LLC has at least one manager and one member. Depending on your state, you may also need to include additional pages that explain the roles and functions of your managers and members.
Getting help from an experienced attorney is recommended before filing your Articles of Organization. They can guide you through the process while avoiding legal mistakes that can cost your company money and cause serious damage.
The bylaws of your Florida LLC are the internal rules that govern how the business is run. They describe how many shareholders and directors are in the company, how meetings are held, and how profits and losses are distributed.
The process of writing bylaws can be time consuming, so it’s best to get the help of an attorney. Ideally, the lawyer will be familiar with your particular type of business and can tailor the document to the legal needs of your operation.
A well-drafted bylaw can provide valuable protection to your LLC. For example, Florida corporate bylaws can limit judgment creditors from levying on a debtor’s interest in LLC distributions.
An LLC operating agreement is a document that outlines how the company will be managed. It can help prevent future conflicts among owners or managers.
As with a partnership, an LLC should have a written operating agreement in place that identifies each member’s interest in the LLC and how it will be managed. This can help avoid disputes between members and ensure a smooth transition of the business when necessary.
It can also provide evidence as to the identity of the owner(s) in case a dispute arises. This is particularly important for single-member LLCs.
An operating agreement should also include information about how profits and losses are distributed between members, the company’s management structure and policies, as well as details of how it will be dissolved. This is especially important if an LLC elects to be taxed as a subchapter-S entity, since the IRS rules for S corporations require certain provisions in its operating agreement.
An operating agreement is a document that sets out the rules, policies, and ownership structure of a Florida LLC. While not mandatory, it is recommended that a business owner have an operating agreement to clarify the rights and responsibilities of the owners and managers.
For instance, an LLC should have clear guidelines on how profits are divided among its members. It also should have procedures to ensure that members are held responsible for completing certain tasks and obligations.
A strong operating agreement can also help shield members’ personal assets from claims against the company in court. Additionally, it can reduce disputes between the members and facilitate the dissolution of an LLC if necessary.
An operating agreement can be updated whenever a business owner makes changes, such as adding or losing a member, introducing new management structures, or modifying capital contributions. This should be done carefully and with all members’ signatures on the documents.