Forming a limited liability company (LLC) may be one of the best ways to protect your interests while still maintaining the flexibility you need to run your business. This article will address the basic issues in creating a LLC in Florida.
How do I start?
There are some specific documents recommended as the basics for the formation of an LLC – Articles of Incorporation (or Organization) and Operating Agreement.
What Are Articles of Incorporation/Organization?
Articles of Organization are the most basic documents of an LLC. The Articles need to cover: the proposed name of the LLC, the LLC’s primary street and mailing addresses, the name, address, and written acceptance of the LLC’s registered agent.
In your LLC’s articles of organization, you should also include whether the business will be manager-managed or member-managed. Manager-managed LLCs are managed by people appointed by the members to conduct operations on their behalf and member-managed LLCs are managed directly by one or more of the owners.
Beyond the basics, your articles of organization may include, the names and addresses of the initial members and, if applicable, the initial managers, any limitations on the authority of the members and/or managers and other matters relevant to the LLC’s operation.
What should you name your LLC?
LLCs in Florida must have the words “limited liability company” or the abbreviation “L.L.C.” or “LLC” included in the name. Additionally, the name must be distinguishable from other companies incorporated with the Division of Corporations, but that does not apply to registered fictitious names, general partnerships, and limited liability partnership statements. The name may not suggest or outright state that the LLC is organized for a purpose not authorized by the Florida Revised Limited Liability Company Act or the Articles of Organization and the name may not suggest or outright state that the LLC is associated with a state or federal agency, nor any other entity chartered under the laws of the united states.
Before submitting your articles, you can perform a basic name search to make sure that the proposed name hasn’t already been taken and would be easily distinguished from other businesses. Your LLC’s name isn’t unique enough from those already in existence if its only difference is a suffix or a definite or indefinite article or the word “and” or the “&” symbol or a word has been made singular, plural, or possessive or a recognizable abbreviation or punctuation marks or other symbols. The name will only be registered when your LLC is successfully formed as you cannot reserve a name for your LLC.
I have the LLC name and Articles, what now?
The limited liability company is formed when the LLC’s Authorized Representative signs and files those articles of organization with the Florida Department of State Division of Corporations, which can be completed online.
Ok, but who is the Authorized Representative?
An Authorized Representative is anyone who was appointed by the LLC’s members to act on behalf of the company. The Authorized Representative can be a person, a group of people, a business, or almost any other organization.
How does the Authorized Representative file the Articles of Organization?
The Authorized Representative may file the LLC’s articles of organization online, by mail, or in person, plus payment of the filing fees.
Now, what Is an Operating Agreement?
An LLC’s operating agreement is the contract that established how the business will be managed. You aren’t required you to have one, but it’s an essential document. Operating agreements can spell out responsibilities and duties and can greatly reduce the likelihood of disputes in LLCs with multiple members.
What the Operating Agreement Cover?
The Operating Agreement will really depend on the specifics of your business, but there are a few basics that should be addressed: (1) Whether the LLC is member-managed or manager-managed; (2) How members are added and removed; (3) the percentage of ownership for each member; (4) any restriction on members working for other entities; (5) what happens if a member dies or incapacitated; (6) what circumstances and conditions apply when adding new members; (7) the responsibilities of the members, managers, and other officials acting on behalf of the LLC; (8) how and when meetings will be held; (9) whether meetings must be held before the LLC can take actions; (10) how to dissolve the LLC and wrap up business; (11) management rights and authority of the members; (12) how the profits, losses, and other distributions will be made among the members; (13) what the initial capital contributions are; (14) what the notices and procedures for meetings; (15) what the member/manager liabilities to third parties are; (16) how to amend the articles of organization or operating agreement; (17) Indemnification of members/managers by the LLC.
Sounds like a lot. What can’t be included in the Operating Agreement?
The agreement, at a minimum, cannot change the ability for your LLC to be sued, eliminate obligations of good faith and fair dealing for the members/managers, or their duty of loyalty or duty of care, cancel out liability for someone’s bad conduct, bad faith, knowingly breaking the law, or intentional misconduct, alter the grounds for dissolution stated in Fla. Stat. § 605.0702, change the requirements of winding up the LLC’s business, activities, and affairs stated in Fla. Stat. § 605.0709(1), provide indemnification or compensation under Fla .Stat. § 605.0408 for: Acting in bad faith, knowingly breaking the law, or committing intentional misconduct, Transactions improperly benefiting a member or manager, Breaching duties of loyalty or care, Improper distributions incurring liability applicable under Fla. Stat. § 605.0406. You can view Fla. Stat. § 605.0105(3) for more provisions that cannot be included in the agreement.
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