You’re starting a new business in Florida, and your operation has a casual vibe. You want your operating structure to reflect that while still providing personal protection, which is why you are considering forming a limited liability company (LLC).
An LLC is one type of operating agreement
A limited liability company commonly called an LLC, is one of several different types of operating agreements under business law. LLCs use operating agreements to outline the company’s functions and financial decisions with the purpose of governing internal business operations. Once LLC members sign it, this document is officially binding.
One of the key provisions of an LLC operating agreement is to protect its members from personal liability in business operations. Without including such a provision, your business structure will operate more like a partnership or single proprietorship, making you liable for poor business decisions. An LLC operating agreement should also clarify verbal agreements and contracts. It will also preclude you from being subject to Florida’s business operating rules.
Operating agreements typically have the following provisions:
- Members’ ownership percentages
- Members’ and managers’ duties and powers of
- Profit and loss distribution
- Voting rights and responsibilities
- Buy-sell rules
- Procedures for transferring ownership if a member dies
Setting up your business properly
If you are working independently, you may not have officially incorporated your business. Even if you don’t plan to add partners or employees immediately, incorporating your business as an LLC will give you additional legal protections. Choosing the right business structure for your company takes time and consideration as it will affect all contracts, agreements, and other documents that you may require for operation.
Operating structures also have financial implications, so it’s a good idea to consult a financial professional to help determine what is the best business structure for you. A qualified financial professional can also help lighten your tax burden by recommending procedures and clauses that should be included in an operating agreement, whether for an LLC or another type of business structure.