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Drafting an Operating Agreement

Drafting an Operating Agreement

A limited liability company is an important legal option for your business that can both protect you personally and give your company added credibility in the eyes of stakeholders. LLCs are governed by operating agreements. These are binding on your LLC, so it is important that you get it right when you first draft it. Otherwise, you could end up in costly litigation. Even though Florida law does not require your LLC to have an operating agreement, it is a good idea to have one anyway.

There are a number of choices that you must make when you are drafting an operating agreement. Here are some things that your operating agreement should cover:

  • The number of members
  • How management is to be structured
  • Member investment in the LLC
  • How profits are to be distributed
  • Dissolution
  • How membership interests are transferred

Having an operating agreement allows you to dictate what happens with your business rather than relying on state law. Without an agreement,  a judge would apply Florida law to determine the outcome of any disputes. In addition, having an operating agreement leaves no doubt that you are running an LLC. Otherwise, it could look like you are operating a sole proprietorship, which could make you personally liable for business debts.

Finally, there is less uncertainty among the members of the LLC as to how the business is run. If there are any disputes among the members, the first place that they will look is the operating agreement. When in doubt, it is always better to have more protection.

Call a Boca Raton Corporate Law Attorney

The attorneys at Rubino Findley PLLC work with Florida small businesses to help select the proper corporate form and execute the necessary documents. To learn more about how we can help you, call us today at 561.220.0741, or send us a message online.

 

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