Not every LLC needs an operating agreement or requires one from its inception, but the decision as to whether the LLC needs one and when it should have one should be made by the owner or owners after understanding the issues that impact the decision. Without an operating agreement, the LLC is bound by the Revised LLC Act, Chapter 605, Florida Statutes and, therefore, gets what the Legislature has decided the business should have. Sometimes, this one-size fits all approach is not appropriate for or tailored to the needs of the business.
To increase the efficiency of the process of developing an operating agreement to fit a business and to reduce the costs involved, David Steinfeld created a proprietary and easy to navigate questionnaire that incorporates the provisions of the Revised LLC Act that can be changed or modified. This allows the Law Firm to obtain salient information from the business owner without a lengthy and direct interaction, which effectively eliminates one meeting and saves hundreds of dollars for the business. Because many LLCs undertake an operating agreement early in their existence, the cost of so doing is normally very important because the fledgling business often has only so much money with which to work at that point. By making the process of creating he operating agreement faster and cheaper for the business, the Law Office of David Steinfeld can provide a value and benefit to the business that promotes its future success and avoids costly disputes in its future.
To create a business in Florida, all one has to do is log on to the Sunbiz website and follow the prompts. It is no different and no harder than purchasing merchandise online. While a corporation is said to be “incorporated” and an LLC “organized”, the result is that once approved, Articles are filed with the State and the entity is born. The Law Office of David Steinfeld based in Palm Beach Gardens can easily and effectively provide guidance in the formation of a business anywhere in Florida, but the greater value that an experienced, Board Certified expert business lawyer like David Steinfeld provides is in the crafting and preparation of documents used in managing and operating most business ventures called corporate governance documents. These include operating agreements, shareholder agreements, and partnership agreements. David Steinfeld also assists businesses in determining whether they need documents for dealing with parties collateral to and outside of the business, such as employees, vendors, and customers, like non-compete agreements, non-disclosures, and contracts.
However, not every business needs a full complement of every document available to it at the time it opens. Which documents are appropriate and when in the lifecycle of the business they can or should be used is the benefit of consulting with David Steinfeld. There are considerations that apply to these documents that Mr. Steinfeld can explain with his expertise in the field, making it easier for the business owner to make informed decisions on the topic.
How do you set up a business in Florida – Part 3: Why use the LLC
In 1999, Florida put its first LLC laws in place and then upgraded them in the early 2000s. Because the LLC was created by the Legislature it is commonly referred to as a “creature of statute” as opposed to the corporation and partnership that developed in common practice first and then were formalized or “codified” into actual written law by the government. More recently in 2013, the Florida Legislature updated and upgraded our LLC laws to fill in some gaps that had been identified over the previous years and make the LLC more user-friendly for people wanting to do business in the State.
One of the reasons why the vast majority of all businesses now formed in Florida are LLCs is because it acts like something of a hybrid; it provides and combines the protections of the corporation with which many are familiar with the practical day-to-day use and feel of the partnership. It is arguably less burdensome to manage than a corporation and provides more protections than the partnership, thus making it an ideal choice for the closely-held concerns that comprise the bulk of the business engine in Florida.
The most common business entity used at present in Florida is the LLC. Historically, several hundred years ago, the partnership was the only method by which to conduct business with others. Then, in the mid-1500s, the corporation as we understand it as a means to do business came into being to support voyages to the new world. It would seem that it was deemed more practical at the time to have a small governing board to guide the venture with one-hundred fifty shareholder/investors as opposed to one-hundred and fifty actual partners who each might have wanted to have the adventure go in a different direction.
From that time until the end of the twentieth century, the options for business people were the corporation or the partnership. However, most businesses in Florida are closely held concerns owned by one or a handful of people and are not large businesses with hundreds of stockholders, publicly traded stock, a large board of directors, or thousands of employees. Therefore, the corporation as a legal entity by which to conduct business was too cumbersome for most people and was akin to nailing a thumbtack in with a sledge hammer. In reaction, in the early to mid-1990s, the Florida Legislature revised the partnership laws to allows for different types of partnerships that would better accommodate how business people were actually operating in the State. But, those options did not afford the legal protections offered through the corporation and by the end of the 1990s they were largely abandoned in favor of the limited liability company.
For those reading this information, thank you, in advance for taking the time to do so. Please know that this information is not intended to constitute legal advice for your unique situation, but is only provided as a general and helpful means of information to those interested in doing business in the State of Florida. The author, Palm Beach Gardens business lawyer David Steinfeld, is a Florida Bar Board Certified expert in business law and provides advice that is tailored to the unique needs of business people. Other helpful information on Florida business law and real estate law is on this website www.ThePalmBeachBusinessLawyer.com
In Florida at present there really are no burdensome requirements to set up a business other than having a credit card and a physical address for a registered agent. For example, there are no citizenship requirements or bonds or a test to pass, which would seem to promote the open development of business in the State.
There are three types of business entities in Florida. They are the corporation, which is designated by the letters “Inc.”, the limited liability company, designated by the letters “LLC”, and the partnership with its various permutations that can be represented by letters such as “L.P.” for limited partnership, “L.L.L.P.” for limited liability limited partnership, etc. The “S Corp” is not a legal business entity, but is merely a tax election that a business owner makes with its accountant.