Florida law does not require an LLC to have a written operating agreement to be validly formed. This leads many small business owners to skip one entirely — a decision that can create serious problems down the road, particularly when a business has more than one owner.
What an Operating Agreement Actually Does
An operating agreement is the internal governing document of an LLC — it defines how the business is owned, managed, and operated, and what happens in situations the members haven’t yet had to think about. Without one, the LLC is governed entirely by Florida’s default statutory provisions, which are generic and may not reflect what the owners actually intend.
Key Provisions Every Operating Agreement Should Address
- Ownership percentages and capital contributions — who owns what, and what each member contributed to get there
- Profit and loss allocation — which doesn’t have to mirror ownership percentages, but should be explicitly addressed if it doesn’t
- Management structure — member-managed vs. manager-managed, and decision-making authority for day-to-day versus major decisions
- Voting rights and required approval thresholds — unanimous consent vs. majority vote for different types of decisions
- Transfer restrictions — whether a member can sell or transfer their interest without other members’ consent
- Buyout and dissolution provisions — what happens if a member wants to leave, becomes disabled, dies, or the members simply want to dissolve the business
Why Default State Law Isn’t Enough
Florida’s default LLC statute fills gaps when an operating agreement is silent — but its default rules are generic and may produce outcomes the members never intended. For example, without an operating agreement addressing it, disputes between members over management decisions can be difficult to resolve, and there may be no clear mechanism for buying out a member who wants to exit.
Single-Member LLCs Need One Too
Business owners with a single-member LLC sometimes assume an operating agreement is unnecessary since there’s no other member to disagree with. This overlooks two important functions: it reinforces the separation between the owner and the business (relevant to liability protection), and it’s frequently required by banks, lenders, and title companies before they’ll do business with the LLC.
Buy-Sell Provisions Deserve Special Attention
For multi-member LLCs, the provisions governing what happens if a member wants — or needs — to leave the business are often the most consequential, and the most commonly neglected. These issues are significant enough to warrant their own dedicated planning; see our article on buy-sell agreements for a deeper look at structuring these provisions.
Revisiting the Agreement Over Time
An operating agreement drafted at formation should be revisited as the business evolves — new members joining, ownership percentages changing, or the business pivoting into a different structure can all make an original agreement outdated. Treating it as a living document, rather than a one-time formality, helps avoid disputes rooted in outdated assumptions.
Forming an LLC, or realizing your existing LLC doesn’t have a proper operating agreement? Brent A. Levison, P.A. helps business owners draft operating agreements that actually reflect how they intend to run the business. Contact the firm today for a consultation.
The information in this article is provided for general informational purposes only and does not constitute legal advice. For advice specific to your situation, please consult a qualified attorney.