Don’t forget the Operating Agreement for your new LLC
The limited liability company is a popular business entity for owners of investment real property who wish to protect themselves from business debts and liabilities. To form a limited liability company (“LLC”) in Florida, the essential document which must be filed with the state is the Articles of Organization. It identifies the LLC’s members (owners), managers and registered agent and informs the public how to contact them. It is possible to form a new LLC on the Florida Division of Corporations’ website within a few minutes by paying a fee and filling out an online questionnaire, which generates a no-frills Articles of Organization for the LLC. However, all LLCs, even those with only one member, should have a second document, an Operating Agreement, that is tailored to the specific needs of the company.
The Operating Agreement sets out how the LLC will be organized, managed, run and eventually dissolved. It can state who will serve as a successor manager if the original manager becomes incapacitated or dies and it can establish duties of managers and members in addition to those stated in the Florida Statutes (to the extent that the Operating Agreement does not otherwise provide, the provisions of Chapter 605, F.S. control). The Operating Agreement can also contain language reinforcing the limited liability aspect of the LLC by expressly stating that managers and members are not liable for debts or liabilities of the company and affirm that the business is separate from the members personally. Most potential lenders will want to examine an LLC’s Operating Agreement before lending money to the company.
An Operating Agreement, while not absolutely necessary for the establishment of an LLC, is a practical necessity for any multi-member LLC and strongly advised for single-member LLCs as well. For this reason, when forming an LLC it is important to discuss your situation with a business attorney so that you can craft the best Operating Agreement for your new company.