Florida Laws for Setting Up an LLC As a Subsidiary

By Angela Floyd

Your existing business may want to form a subsidiary LLC as an investment or, perhaps, to spread out your business’s assets or liabilities. Your existing business will be the parent company and your new limited liability company will be the subsidiary. In Florida, your business entity may either be the single member of the subsidiary LLC or may share ownership with other businesses or individuals. Your subsidiary LLC is set up just like a standalone LLC.

LLC Basics

An LLC is a state-based business structure. LLCs provide owners, called members, with limited personal liability for the LLC's debts and actions. So, if the LLC has incurs debt or faces a lawsuit, only the assets of the LLC itself are at risk, not the members’ individual assets -- that is, unless an LLC member has personally engaged in illegal, reckless or unethical behavior. This liability protection is the typical reason you will form a subsidiary LLC. The parent company is not liable for the debts of the subsidiary LLC. Only the assets of the subsidiary LLC are at risk.

Naming the Subsidiary

Your business name cannot be the same as another business on file in Florida. You’ll need to do a business name search to make sure the name is available. This can be done on the Internet through the Florida Division of Corporations at its SunBiz website. Your name must end with the words “Limited Liability Company,” the abbreviation “L.L.C.” or “LLC.” In addition to following Florida’s LLC naming rules, you must also make sure your name won't violate another company's trademark. When you file your articles of organization, your business name will be automatically registered. Available names are granted on a first come, first serve basis, and cannot be reserved. If your subsidiary LLC is located in another state (a "foreign" LLC) and your name is already taken in Florida, you can apply to do business in Florida under an alternate name.

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In Florida, you will file what are called “articles of organization.” You will file with the Florida Division of Corporations using a short form the office provides. Your articles must specify your LLC’s name, main office address, and the name and address of each manager or managing member; members that actively and continuously manage the company are called “member managers.” You must indicate "MGR" for each manager or "MGRM" for each managing Member. You will also have to provide the name and address of your business’s registered agent, who is the person that will receive legal papers in the case of a lawsuit. At least one member must sign the articles. You can file online or via mail. Your completed articles of organization must be submitted along with your filing fee.

Operating Agreement

When a subsidiary LLC is owned by one or more business entities, the owners of the parent businesses typically govern it. How this governance works is up the subsidiary LLC members. You should set out member rights and responsibilities through an operating agreement. A typical operating agreement includes percentage interests in the business, voting power and requirements, division of liabilities and assets, management directives, meeting rules, dissolution procedures and buyout provisions. In Florida, the operating agreement does not have to be filed with the state.

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