When a business forms as a limited liability company, there can be several benefits. These entities often use operating agreements for governance. Having an operating agreement for your Florida LLC is an important part of helping to ensure it is well organized and runs smoothly. However, an operating agreement must contain useful terms to be effective. Here are some essential operating agreement clauses to have in place to support your Florida LLC.
LLC Management Terms
Members own an LLC, but individuals selected by the members may manage it. It is also possible for an LLC to be managed by member managers. How the LLC will be managed and who will be responsible for its management is an essential clause for your Florida LLC operating agreement. The LLC operating agreement management clause should also include details about the manager’s responsibilities and how the LLC can replace management if necessary.
Member Rights and Obligations
LLC members will have certain rights and responsibilities to the company. Therefore, identifying what each member is permitted and required to do in connection with the LLC is essential. This clause can also include the members’ respective financial obligations and fiduciary duties.
Member Interests
LLC members have an interest in the company the way shareholders have an interest in a corporation. However, unlike shareholders, members have certain categories for membership interests. Depending on their category, a member may or may not have different rights with respect to the company. Accordingly, your Florida operating agreement should identify each member and their membership interests in the LLC.
Profit, Loss, and Distributions
An LLC will have profit and losses, and members will be entitled to receive distributions. A Florida LLC operating agreement should determine how members will realize profits and losses. Likewise, member distributions can occur at various intervals and under certain conditions. Your LLC operating agreement should include a clause that provides for distribution events.
Members Leaving and Being Added to the LLC
An LLC operating agreement should include clauses that describe the conditions under which members will leave and be added to the LLC. For example, certain events may require that a member leave, such as a breach of fiduciary duty. Further, members may want to sell their interests. The LLC may also want to change members or add new ones. The operating agreement should include a clause detailing how membership changes will work for the LLC.
LLC Dissolution
When an LLC is formed, members may expect the company to continue in perpetuity. However, a comprehensive LLC operating agreement will include a clause that explains under what conditions the LLC will dissolve and the processes to be followed to achieve dissolution.
Having an operating agreement for your Florida LLC is an essential part of supporting its growth and success. However, it’s important to know that these agreements are legally binding. Therefore, it’s important to work with an experienced Florida business attorney when creating an operating agreement for your LLC. Your Florida business lawyer can assist you with developing the right clauses for your enterprise and identify ways to protect your interest.
Contact an Experienced Florida Business Lawyer
Attorney Richard Sierra at the Florida Small Business Legal Center assists clients like you with commercial leasing, business, and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.