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Top 6 Reasons Single-Member LLCs Need Operating Agreements
One of the most common methods of structuring a business in Florida is as a limited liability company (LLC). This corporate structure is very versatile and can be used for various business purposes. LLCs are also favored because they help shield business owners from liability. Another benefit of the LLC is that solo entrepreneurs may also create a single-member LLC. In fact, that is one of the most common reasons for forming an LLC in Florida.
Although business owners are not legally required to draft an LLC operating agreement when forming a single-member LLC, an LLC operating agreement drafted by an experienced business law attorney can ensure liability protection and stability.
What Are the Top Six Reasons Why a Single-Member LLC Should Have an Operating Agreement?
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Liability protection: One of the primary benefits of an LLC is that it differentiates between the LLC owner and the company. This can help shield the owner from potential liability. The existence of an LLC operating agreement goes a long way toward showing that the business is operated by a separate legal entity and not by the owner, which can guard against losing liability protection in court.
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Avoid default Florida state rules: LLCs without operating agreements will be governed by Florida’s LLC law. By drafting an agreement, business owners can set the terms that are most advantageous to their business, rather than be bound by the state’s default terms. The Act allows an LLC operating agreement to override the rules set forth in the law.
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Clarify succession: An LLC operating agreement with a dissolution clause can ensure a business is protected in the event the unexpected happens and the sole owner can no longer operate the company. This makes it much easier to continue or wind down an LLC.
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Maintain control: An operating agreement can define the contours and compensation of any future manager role to avoid conflict about any overlap between owner and manager.
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To enable a business to bank: Banks will ask to see an LLC operating agreement before they open a business account, as well as the articles of organization.
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To facilitate business growth: Potential investors will look to your LLC operating agreement to understand the company’s organizational structure.
Contact Our Fort Lauderdale, FL LLC Lawyer for Help
While a Florida LLC is an excellent way to structure your Florida business if you are a solo entrepreneur, an LLC operating agreement helps your business get the full benefits of the LLC structure. An Oakland Park, FL business transactions attorney can draft your LLC operating agreement. At The Elliot Legal Group, P.A., we have the knowledge and experience to advise you about the best ways to utilize such an agreement to protect the interests of your business. Speak with a skilled LLC attorney by calling 754-332-2101 today.
