No. Florida doesn’t require LLCs to have an Operating Agreement; however, it is always recommended that you create one. Experts advise every Florida LLC owner to put together a comprehensive operating agreement to protect the operations of their business.
Although not legally mandated by the state, have it in mind that creating an operating agreement will set very explicit rules and expectations for your LLC while also establishing your credibility as a legal entity. Your Florida LLC Operating Agreement is a legal document that notes your company’s organizational structure and policies.
A thoroughly prepared one will include information about how decision-making power is shared, how a company is run, how profits are distributed, and how problems will be handled. It should also note how the company will be dissolved, that’s if it eventually gets to that.
Unlike your Florida Articles of Organization, this document is an internal document, and you won’t have to file it with the Florida Department of State. Note that when there is no Operating Agreement, the rules established by the Florida Statutes will have to apply.
These statutes are blanket rules meant to cover a wide array of cases and therefore are not tailored to meet the needs of a specific company. The law provides that the Operating Agreement may be oral, implied, or recorded in any medium.
Without doubts, having an Operating Agreement is a sign of the seriousness of a company, and this may help the business in many ways, such as access to loans, angel capital, and investors; or may be required for other purposes such as immigration visas.
For all these reasons and many more, it is always recommended that the owner or owners of an LLC put together an Operating Agreement well aligned to the needs of the company.
Reasons Why a Florida LLC Should Have an Operating Agreement
Although it is not mandatory in the State of Florida, have it in mind that an operating agreement is legally binding, and this makes it one of your most vital internal documents. Reasons you should have an operating agreement include;
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It proves you own your LLC
Truth be told, businesses in the State of Florida can decide not to include the names of their members or managers in their articles of organization (although this information will be necessary when it’s time to file the annual report). Note that the minimal information meant to be in the articles of organizations helps businesses maintain privacy initially—but may not help members show proof of ownership.
However, you will be expected to show proof of ownership to complete certain crucial steps for your LLC, like opening a bank account. Since an operating agreement outlines the names of all members and managers, it can be used as proof that you own your business.
Vital to protect your limited liability status
Note that to protect and maintain a company’s limited liability status, LLCs are expected to consistently show that the company is a separate legal entity from its members. Aside from setting up a bank account for your LLC, note that putting together a detailed operating agreement helps validate this separation by dishing out policies and procedures for the business.
Helps to prevent conflict among your business partners
If you intend to start or you already own a multi-member LLC, note that having an operating agreement will help lessen misunderstandings amongst your team by setting clear expectations about each partner’s role and responsibilities.
You need to understand that people fight, and can in many situations not be on the same page, and this can make it very challenging to move forward with your business. However, with a properly written operating agreement, you can create an agreed-upon set of rules for your company early on, and this can help mitigate any misunderstandings later on.
Can help override Florida’s default laws
Just as it was noted above, when there is no Operating Agreement, the rules established by the Florida Statutes will have to apply.
These statutes are blanket rules meant to cover a wide array of cases and therefore are not tailored to meet the needs of a specific company. Creating an operating agreement for your Florida LLC means that you can create an organizational structure (within the bounds of the law) to align properly with the needs of your business.
Things to Include in a Florida Operating Agreement
Your operating agreement is meant to outline the internal structure of your LLC. You are allowed to include anything not already covered by Florida state statutes, as long as they are within the bounds of the law. A reliable operating agreement will have to include:
- Company formation/dissolution
- Initial contributions
- Profits, losses, and distributions
- Management
- Compensation
- Bookkeeping procedures
- Transfer of membership interest
- Voting rights and decision-making powers
Conclusion
No laws in Florida mandate an LLC to have an Operating Agreement. It simply means that owners of the LLC can run the business as they choose, as long as they comply with the requirements and limitations of business laws in the State.
However, if you intend to create a company in Florida, it is recommended that you seek the expertise of a lawyer in Florida who will guide you through the process, as well as advise you on the legal protections and benefits of having an operating agreement or many other things.