If you are an owner in a limited liability company, or LLC, you must have an operating agreement. Although the Florida statute governing LLCs does specifically require an LLC to have an operating agreement, for the sake of your company, you must have an operating agreement. Many business owners, when forming their company, are too near-sighted to realize that there will be disagreements that emerge down the road. An operating agreement serves to bind the LLC when those disagreements emerge. The benefits of having a binding operating agreement are limitless.
One reason an operating agreement is important is that it can deal with what to do with profits and asset distribution. An operating agreement can bind the company when profits are realized by enunciating who receives what in various situations. Alternatively, if business affairs sour, and the company is forced into dissolution, it can make clear who receives what. Many business owners and partners do not have the foresight to think about these situations because of the honeymoon phase whereby everybody believes the LLC will be a huge success.
There is no single most important reason for having an operating agreement. Rather, it can serve as a template for whenever any contingency occurs in the LLC. An operating agreement can assign management rights among the co-owners, determine what votes are necessary in management decisions, and can determine what happens if a member wishes to leave.
Without an operating agreement, management decisions default to state statute. Therefore, in any situation where debate remains as to how to handle a situation, it may be out of the LLC’s control. Decisions based on default rules may not be in the best interests of the company. It goes without saying that the importance of an operating agreement cannot be understated. It is equally important to ensure you put the proper operating agreement in place to deal with all contingencies. Consulting with the right legal team can ensure you do just that. Call the Trembly Law Firm at (305) 431-5678 today to schedule your consultation.