What Are the Governing Documents for an LLC?
By: Barry E. Haimo, Esq.
November 21, 2021
If you already have or want to create an LLC, you should know that Florida has laws for these types of business ventures regarding LLC governing documents . What kinds of documents do you need?
To be recognized as an LLC by the state, a registrant must file Articles of Organization with the Florida Division of Corporations. The default rules apply if there is no operating agreement. While an operating agreement is not required, it is strongly recommended. And this is especially true if more than one person is involved in creating the LLC.
Below, we’re going to go over both types of documents.
Articles of Organization
This is a document that lists all of the basic (but important) information that creates your LLC. Articles of Organization include the following:
- Company Name
- Statement of Purpose/Mission Statement
- Duration (perpetual or otherwise)
- Place of Business (location of headquarters)
- Registered Agent
- Management (whether the LLC is member-managed or manager-managed)
It is always helpful to have an experienced lawyer draft Articles of Organization or at least take a look before you submit them to ensure there are no errors.
Operating Agreement
The operating agreement will be tailored to your business’s needs. There are boilerplate documents available, but they do not do you much good.
The operating agreement will outline each partner’s roles and responsibilities, address allocations of profits and losses and distributions to partners, managerial processes and rules, voting thresholds, transfers of interests, noncompete and non-solicitation prohibitions, and death and disability.
The basic provisions included in an operating agreement include:
- Each member’s percentage of ownership
- Each member’s voting rights (usually, but not always, determined by percentage of ownership)
- Allocation of profit and losses
- Specifics of member meetings
- Identification of manager(s)
- Roles and responsibilities of each manager
- Instructions for exiting members
- LLC procedures when a member exits
- Instructions for the dissolution of the LLC
What If There Is No Operating Agreement?
As mentioned above, operating agreements are not required by Florida law. However, they come in handy when there is an inconsistency or dispute in the way the LLC is managed. If there is no operating agreement present and a dispute arises, the Florida rules will take over.
In 2013, the Florida Legislature passed the Florida Revised Limited Liability Company Act. It went into effect at the start of the next year. The act provides “default rules” for how LLCs are run. These default rules will be used if an LLC has not written an operating agreement, if the existing operating agreement does not address the issue at hand, or if the operating agreement violates current Florida law.
It is extremely important to stay up-to-date with the limitations and policies regarding LLC governing documents and operating agreements.
Consult an Attorney While Drafting LLC Governing Documents
Ongoing changes to Florida law are just one reason to keep an attorney on speed dial while you are forming an LLC and drafting LLC governing documents.
A business planning attorney who has experience with how operating agreements should work for LLCs can help you draft an operating agreement within the limitations of Florida law that will still address a wide range of issues. Failing to retain an attorney may leave you quite surprised and fixing the problem will be more expensive than avoiding it in the first place.
Originally published 10/13/2016. Updated 11/21/2021.
Author:
Barry E. Haimo, Esq.
Haimo Law
Strategic Planning With Purpose®
Email: barry@haimolaw.com
YouTube: http://www.youtube.com/user/haimolawtv
YOU ARE NOT OUR CLIENT UNLESS WE EXECUTE A WRITTEN AGREEMENT TO THAT EFFECT. MOREOVER, THE INFORMATION CONTAINED HEREIN IS INTENDED FOR INFORMATIONAL PURPOSES ONLY. EACH SITUATION IS HIGHLY FACT SPECIFIC AND EXCEPTIONS OFTEN EXIST TO GENERAL RULES. DO NOT RELY ON THIS INFORMATION, AS A CONSULTATION TO UNDERSTAND THE FACTS AND THE CLIENT’S NEEDS AND GOALS IS NECESSARY. ULTIMATELY WE MUST BE RETAINED TO PROVIDE LEGAL ADVICE AND REPRESENTATION. THIS INFORMATION IS PROVIDED AS A COURTESY AND, ACCORDINGLY, DOES NOT CONSTITUTE LEGAL ADVICE.
