Making a business in Florida – Part 3 of 9
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.
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.
LLCs have members and can also, but are not required to have managers. If there are no managers, then the entity is member-managed and the members have a vote to match their ownership percentage unless that is modified in the operating agreement. If the business has an operating agreement and chooses to be manager-managed then the manager or managers make all the decisions unless their authority to do so is limited by the operating agreement. The emerging pattern here is having an operating agreement is smart as it allows for full control over the management of the company. Choosing not to have one leaves the business at the mercy of what the Florida Legislature put in Chapter 605, the Revised LLC Act.
The LLC is arguably less burdensome to manage than a corporation and provides more protections than the partnership. That makes the LLC an ideal choice for the closely-held concerns that comprise the bulk of the business engine in Florida. It is very easy to organize an LLC online, which is the same thing as incorporating it just a different term for the LLC, Without an operating agreement the business is stuck with what is in the Revised LLC Act. Operating agreements are not that costly to create so it is wise for a LLC to have one even for single-member LLCs where the document can act like a Will for the business to assist the member's beneficiaries.
The Palm Beach Business Lawyer Blog
Board Certified expert in Florida business law, David Steinfeld has almost 25 years legal experience.