Florida LLC Operating Agreement

The internet is a wonderful place to gather information.

It is a terrible place to obtain legal advice.

Every week, business owners come to us after downloading a "free" Florida LLC Operating Agreement or LLC form they found online. They assume they have saved hundreds—or even thousands—of dollars in legal fees.

Unfortunately, many discover the real cost only after a dispute arises.

The Problem With Free Legal Forms

There is no shortage of websites offering "free" legal documents.

The problem is that you have no way of knowing:

• Who drafted the document;

• Whether it complies with current Florida law;

• Whether it was written for another state;

• Whether it addresses your particular business; or

• Whether it protects you if something goes wrong.

An Operating Agreement is much more than a form. It is the rulebook that governs how your business operates.

Laws Change

One of the biggest dangers of relying on internet forms is that the law changes.

Florida's Limited Liability Company Act has undergone significant revisions over the years. Those statutory changes affected numerous provisions commonly found in Operating Agreements, including:

• management authority;

• voting requirements;

• admission of new members;

• member dissociation;

• fiduciary duties;

• creditor rights;

• dissolution procedures;

• mergers and conversions;

• indemnification; and

• numerous default rules that apply when an Operating Agreement is silent.

Many free forms available online simply have not kept pace with these legal developments.

A Generic Florida LLC Operating Agreement Cannot Know Your Business

No two businesses are alike.

A well-drafted Operating Agreement should address issues such as:

• Who owns the company?

• Who manages the business?

• How are profits and losses allocated?

• What happens if an owner dies?

• Can an owner be forced out?

• Can an owner sell his or her interest?

• How are disputes resolved?

• What happens if an owner becomes disabled?

• What happens if additional capital is needed?

• Who has authority to sign contracts?

• Can family members inherit ownership interests?

• Should arbitration or mediation be required?

A free online form cannot answer those questions for you.

The Cost of Doing It Wrong

Many business disputes arise because the Operating Agreement failed to address an issue before it became a problem.

Poorly drafted documents can lead to:

• litigation among owners;

• deadlocked decision-making;

• unexpected tax consequences;

• personal liability;

• expensive buyout disputes;

• problems admitting new owners;

• difficulty obtaining financing; and

• costly business interruptions.

The cost of correcting these problems almost always exceeds the cost of preparing the document correctly from the beginning.

An Operating Agreement Is More Than a Filing Requirement

Many people believe an Operating Agreement exists simply because Florida law requires one.

In reality, it is one of the most important documents your business will ever sign.

It establishes the rights, duties, and expectations of the owners long before disagreements arise.

Like a Will or Trust, it is a document you hope you never have to rely upon—but when you need it, you want it to be drafted correctly.

Invest in Your Business

Your business may be one of your largest financial assets.

Protecting that investment begins with properly drafted legal documents tailored to your business, your partners, and your long-term goals.

Before relying on a free form downloaded from the internet, speak with an attorney who regularly drafts Florida Operating Agreements. A properly prepared agreement today can prevent years of litigation tomorrow.

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