If your Florida LLC does not have a well thought out operating agreement, or is using a generic off-the-shelf version, there could be unintended consequences for the internal operations of your company; including weakening of personal liability protections.
An LLC operating agreement is essentially a legal contract between the members of the company that outlines the specific rules, regulations, and provisions concerning the operation of the business the LLC was formed for.
Many business owners, when starting an LLC, confuse the articles of organization with the operating agreement. Both documents are essential to the proper formation and operation of an LLC. But they fulfill two distinctly different functions.
The articles of organization are the founding document for the company. Once filed with, and then accepted by, the Florida Secretary of State, Division of Corporations, the company is certified as legally existing.
In contrast, a Florida LLC operating agreement contains the rules that govern many different aspects of the company; from how it conducts business to governing its internal operations and member relationships.
Because many states, including Florida, do not require LLCs to have an operating agreement many business owners are often confused about the document’s importance and wonder if they really need one. Thinking that, since they’ve filed the articles of organization with the Florida Secretary of State, and their filing was accepted, that they’re good to go.
Nothing could be further from the truth. The lack of an LLC operating agreement does not mean that there are no rules or regulations affecting the business’s conduct or relations between the various owners. Instead the company is governed by the default rules and regulations set in Chapter 605 of the Florida Statutes. In short, the “internal operations” of your company will be governed by generic rules and regulations that may not mesh well with your business or how the members want to manage and operate the company.
Moreover, without an LLC operating agreement your business operations could be subject to the latest whims of the state legislature.