Florida business litigation attorney L. Reed Bloodworth is the managing partner of Bloodworth Law. This video is Part 1 in a 5-Part series about what should go into a Florida Business Operating Agreement.
What Should Go Into a Florida Business Operating Agreement?
Part 1: Type of Organization
When Reed puts together an operating agreement, the first thing he wants to do is set forth what type of organization it is. You decide the type of partnership, or LLC, or corporation it is going to become. In any business, it goes back to the original operating agreement.
What Else Goes Into An Operating Agreement?
You say, “We’re forming an LLC, this is the name of it, here’s the registered agent and office.” And then, “what’s the purpose of this company? Why are we forming this company? What are we going to be doing?”
You’ll identify who’s taking part in the company and if it’s an LLC, who are the members?
A big question is what type of entity are you going to select in terms of taxation and liability?
You want to verify the membership interests and then start getting into the business aspects of it. You’ll talk about how you’re going to account: Let’s put a section in about the company accounting.
Establishing the Duties
Books and Records, Accounting
Who’s responsible for the books and records? What method of accounting are you going to use? Who’s going to prepare the tax reports? You can designate an individual tax member who is in charge of taking care of the LLC’s tax issues and returns. You can do all those things including who has access to the bank accounts and who is responsible for overseeing them.
The next thing that an LLC should have is a discussion of the capital contributions. Who’s making them; how much are they; what are the conditions for requiring additional capital contributions? What are the conditions of returning capital contributions; what is considered company property versus an individual interest property?
Can a member get advances or put advances toward the LLC? And then you have the capital accounts: What are they; where are they kept; does each member have a capital account? Who keeps track of that?
Duties of Members
Then, you’ll have to get into the kind of actual duties of the members, and that often overlaps with restrictive covenants. So, if you were going to be a member of this LLC, then you need to not do business and work for, or be a member of another LLC, or work against it.
Profit and Finances
Going back to the duty that you have, the first duty is to make money. How do you produce profits for the company? And who is overseeing loans and other financial transactions for the company?
These are the many questions that must be answered when forming a business entity in Florida. If you’re starting a business or you’re in the middle of a business dispute, talk with attorney L. Reed Bloodworth about how Bloodworth Law can help you or your business.