Florida law does not require a limited liability company, or LLC, to have an operating agreement. The LLC owners, called members, are free to operate the business of the LLC as they see fit, subject to the limitations and requirements of Florida LLC law. However, operating an LLC in this manner can have its drawbacks if the default provisions of Florida LLC law do not meet the needs and expectations of the LLC owners. To avoid this situation, owners of an LLC should adopt an operating agreement tailored to their business needs.
Operating Agreement Basics
Florida law permits LLC members with the option to decide whether their operating agreement should be oral or in writing. If the operating agreement includes both oral and written provisions, any inconsistency is resolved in favor of the written provisions. An operating agreement can be made at any time prior to or after formation of the LLC.
Florida LLC Law Limitations
Although the members of the LLC are generally free to regulate the relationship among them and the company through the use of an operating agreement, Florida LLC law does place a few restrictions on the provisions that can be included in an operating agreement. Florida Statute Section 608.423(2) states that an operating agreement cannot unreasonably restrict a member’s access to LLC records, eliminate certain duties of care and loyalty required under Florida law between business associates, and restrict the rights of persons who are not members or managers of the LLC. For LLCs operated by a designated manager or managers rather than all members, Florida LLC law permits the adoption of an emergency operating agreement that is effective only when LLC’s managers are not available due to a catastrophic event.
Common Operating Agreement Provisions
A properly drafted operating agreement contains provisions that specify the internal operations of the LLC as well as the members’ rights and obligations to one another and the LLC. The issues typically covered by the operating agreement provisions include the percentage of each member’s ownership in the LLC, member voting rights, each member’s share of the LLC profits and losses, the time and manner of member meetings, the designation of a manager or managers, the duties and powers of each manager, and procedures for buying-out a member’s ownership interest or for dissolution of the LLC. To ensure such provisions are tailored to the LLC's business and the members' expectations, it is advisable to use the services of a lawyer to prepare the operating agreement.
Florida LLC Record Keeping Requirements
Regardless of whether an LLC has an operating agreement, Florida LLC law requires all LLCs to maintain certain written records at its principal place of business; these records include the articles of organization and LLC financial records including past tax returns. Other records and information required to be kept by the LLC include a list of members and managers, if any, with full names and addresses; a description of each member’s capital contribution in cash, property or services; a valuation of any capital contribution in property or services; the condition for contributing additional capital, if any is agreed to; and the specifying of any event that would result in the dissolution of the LLC. A properly drafted operating agreement can include these provisions to satisfy the Florida LLC record keeping requirements.