The Top Four Reasons Why Your LLC Needs an Operating Agreement
A Limited Liability Corporation (LLC) is one of the least complex and most flexible business structures available to entrepreneurs in Florida. It offers some of the advantages of a partnership, such as the ability to operate as a pass-through entity, and some of the benefits of a traditional corporation, such as liability protection.
If you are setting up an LLC with the Florida Division of Corporations, it is imperative that you have a written operating agreement that governs your business. Without a well-drafted operating agreement, you risk running into major problems. Here, our West Palm Beach business law attorneys highlight the top four reasons why all LLCs should be based around a written operating agreement.
- Day-to-Day Management and Business Operations
One of the primary issues that your LLC operating agreement should address is the day-to-day management of your South Florida business. For your LLC to truly thrive, you need an operating agreement that facilitates efficient business operations. This is one of the reasons why LLC operating agreements should always be individually tailored to the needs of the specific company in question. A standardized form agreement is not effective for many companies.
- How to Deal With Disputes
No one wants to think about intra-business disputes. Ideally, you will never have to deal with any major issues within your LLC. Of course, if you have more than one person with ownership stake in the business, disagreements are almost inevitable. In the right context, business disagreements can even be healthy. With your operating agreement, you can set up a clear procedure to resolve any disputes, as early and painlessly as possible. This will help you avoid deadlocks and other types of damaging conflicts.
- Protect Your Limited Liability Status
To keep the limited liability status for your company, you must be meet several different requirements that have been established by the state of Florida. Your Miami business law attorney can help you craft an operating agreement that will ensure that your limited liability status is well protected. This will prevent you from being subject to any unexpected personal liability.
- Death, Divorce, Disability, Retirement
Finally, LLC operating agreements are especially important during transition periods. There is always the possibility that a major life event will affect the owners of the business. Whether it is a death, a retirement, or another unplanned issue, your LLC operating agreements should establish clear protocols for how the business will move forward. In some cases, business shares will be transferred. In other cases, the LLC may be dissolved altogether. Regardless of your strategy, you need to have a clear plan in place.
Contact Our Florida Business Law Attorneys Today
At Pike & Lustig, LLP, our business law lawyers have extensive experience serving LLC owners and operators in Florida. We can help draft, negotiate, and review your LLC operating agreement. To get a free, no strings attached initial consultation, please contact our law firm today. With offices in Miami and West Palm Beach, including in Hollywood, Weston, Fort Lauderdale, and Deerfield Beach.