What Goes Into a Florida Business Operating Agreement?
Part 5 in this series by Florida business litigation attorney L. Reed Bloodworth, the managing partner of Bloodworth Law, discusses what should go into a Florida business operating agreement. Part 5 in the series covers rights, revenue, and rules that govern members.
This Part 5 in the series: Rights, Revenue, and Rules
This is Part 5 in the series: Rights, Revenue, and Rules.
When you begin working with someone on a business you’ll want to explain what the voting rights are and what actions members can take at a meeting. For example, can you, as one member, give proxy voting rights to another member if you don’t want to go to the meeting?
Or do you want to make it so that a standard member doesn’t have the right to bind the company? You typically give that to the manager, or managing member, or president, depending on the type of structure of the LLC.
Financial Aspects Are Important
Think about other things, like an LLC member who uses their own personal funds for something, a marketing event, or another aspect like an emergency business expense. You might want to put a provision in there about reimbursing expenses of the members.
And then, what type of insurance should the LLC have? It’s there that you start getting into the money and financial aspects of the business, who’s responsible for what?
The Financial Side: Profits and Losses
You have to look at profits and losses and who’s keeping the books. What are the salaries?
And then specifying how distributions of available cash will be made. Can you do a distribution of property in kind? What if one member got $100,000, and then another member — maybe there wasn’t another 100,000 in cash — but maybe the LLC had a piece of property that was worth $100,000, so you can do a distribution in kind.
Then, what happens if you have to return the distribution? And in what circumstances would that happen?
How Will You Elect a Team?
You’ll probably want to put in a section pertaining to elections if you’re going to elect a managing member or elect presidents, or officers.
And then, who is in charge of all the things that go along with keeping the company in compliance with whatever rules and regulations may be applicable?
Finally, you’ll get into standard, miscellaneous items: governing law, venues, attorney’s fees in a dispute. Those are the big, broad picture overview of what goes into an LLC operating agreement.
Be sure to watch the other parts in this series on what should go into a Florida Business Operating Agreement as explained by Florida business litigation attorney L. Reed Bloodworth.Consider sharing this post