If you have formed an LLC in Florida, there are several important requirements that you must obey to ensure your company operates within the law. These include drafting and having your members sign an operating agreement.
An LLC operating agreement should also clarify any verbal agreements between owners, including those involving asset protection. Having a well-written operating agreement can strengthen your legal position in the event of a creditor trying to take you to court.
Member-managed LLCs
In a member-managed LLC, members of the company have control and decision-making authority. They can hire employees, make purchases of equipment, and take orders for products.
If you choose a member-managed structure for your business, your Florida LLC operating agreement will need to spell out how much decision-making authority each of the members has and who they can appoint as managers. You can also document how the management structure will change in case a member leaves or dies.
Manager-managed LLCs have managers who are appointed by the members or hired externally. They can be individuals or legal entities like corporations and other LLCs.
Typically, non-member managers in manager-managed LLCs are employees and receive compensation for their services. This is separate from their owner income and must be spelled out in the operating or an employment agreement.
In addition to the management structure, your Florida LLC operating agreement needs to detail other important management and operational issues for your business. These include how contributions will be handled, how profits and losses will be distributed, and what will happen when one of the owners passes away or resigns.
Manager-managed LLCs
Manager-managed LLCs use a single or multiple managers to make important business decisions for the company. These managers may be members or non-members.
Managers are typically chosen due to their business expertise. This structure is particularly useful in LLCs with multiple members who do not want to be involved in the decision-making process or who may not have sufficient industry knowledge of their particular business to be able to make sound business decisions.
In manager-managed LLCs, managers are governed by state law and may not act in ways that violate the interests of the LLC or its members. Therefore, it is important to carefully consider who is appointed as a manager and what rights they have in making important business decisions.
The operating agreement for a manager-managed LLC should include the names and contact information of managers, the terms under which they have the authority to act on behalf of the LLC, and any other relevant issues. This document is essential to protecting the interests of the LLC and its members.
Owner-managed LLCs
Depending on your business goals and structure, you may choose to have the management of your LLC controlled by the members or a manager. Both options have their pros and cons, so you should consider them carefully before deciding which is the right management structure for your business.
Florida law allows you to elect either member-managed or manager-managed limited liability companies when filing your articles of organization with the state. You should specify your decision in the articles of organization and the operating agreement, which will detail management authority, voting rights for members, a member’s share of profits and losses, how the business is managed, and how members can buy out their ownership interest or dissolve the company.
Having an operating agreement in place will help you maintain control of your Florida LLC, no matter what happens. It will also allow you to set up policies and procedures that work for your company, and make sure your Florida LLC runs smoothly.
Ownership transfer restrictions
A Florida LLC operating agreement should have provisions on how Members transfer their interests in the company. These transfers are important because they can help keep the corporate veil intact, preventing personal liability for an LLC’s liabilities.
Ownership transfer restrictions are most commonly found in member-managed LLCs. They typically require a Member to first offer his or her LLC interests for sale to other Members before transferring them to a third party.
Additionally, a member-managed LLC should include a provision on withdrawal from the LLC. This should be clearly stated in the Operating Agreement and accompanied by a right of first refusal for any other Members that wish to withdraw.
In addition, an Operating Agreement should also provide a clear outline for dissolution of the company in case of a merger or sale. These should be detailed and explained in writing, so that members can be sure that their business is properly disposed of.