The Articles of Organization need to filed with the State of Florida. There is a $125.00 filing fee. Prepare check for this amount made payable to "Secretary of State" and then mail the check and the executed Articles of Organization to:
Florida Department of State
Division of Corporations
P.O. Box 6327
Tallahassee, Florida 32314
Even though the new LLC has only one "member" (the corporation that is the LLC's owner) it is still a good idea to have an "Operating Agreement". One benefit is that it enhances the LLC's limited liability protection (by bolstering the impression that the company has an arms length relationship with its single member). Another advantage is that lenders often expect to see an Operating Agreement when making a loan to an LLC. When an LLC has more than one member the Operating Agreements is entered into between the members. The enclosed Operating Agreement, however, is between the single member and the LLC itself. The "member" is required to sign the document twice in two different capacities (once as the "member" and once as the LLC's "manager"). To avoid confusion I have set the documents up so that a different officer signs on each line (the "president signs for the "member" and th "vice president" signs for the manager of the LLC).
I - Company Name: The name of the Company is:
ARTICLE II - Mailing Address: The mailing address of this Company is:
ARTICLE III - Street Address: The street address of the principal office of the Company is:
ARTICLE IV - Registered Agent: The registered agent and the street address of the registered agent of this Company in the State of Florida shall be:
ARTICLE V - Management: The Company shall have a manager.
VI - No Personal Liability: The managers, officers and
agents of the
Company shall not be personally liable or responsible for any
contracts, debts or defaults of the Company wile acting for or on
behalf of the Company in any official or authorized capacity. The
Company shall indemnify all of its managers, officers, and agents and
all of its former mangers, officers, and agents from such liability
to the fullest extent permitted by law.
VII - Amendments: The Articles of Organization of this
only be amended by the majority vote of the members and in compliance
with the other limitations in these Articles of Organization. No
members shall be obliged to contribute additional capital to the
Company unless such obligation is approved and required by a majority
vote of the members.
ARTICLE VIII - Continuation of Business: Unless dissolved in accordance with the Company’s Operating Agreement, the remaining members shall continue the business of the Company, which shall not be dissolved, upon the death, retirement, resignation, expulsion, bankruptcy, or dissolution of a member or the occurrence of any other event which terminates the continued membership of a member.
IN WITNESS WHEREOF, the undersigned member has executed the foregoing Articles of Organization as of the ____ day of ___________, 200__.
Member: <**enter corporation name**>
By: ________________________________ Date: _______________
CERTIFICATE ACCEPTING DESIGNATION
AS AN AGENT UPON WHOM SERVICE OF PROCESS
WITHIN THIS STATE MAY BE SERVED
The following is submitted pursuant to Section 608.415 of the Florida Statutes:
Having been appointed registered agent of <**name-llc**> in its Articles of Organization, at the place designated in such Articles of Organization, the undersigned hereby agrees to act in this capacity and affirms that he is familiar with, and accepts, the obligations of such position.
__________________________________ Date: _______________
THIS OPERATING AGREEMENT is made effective as of the _____ day of ____, 200__ by and between <**parent-member**>, as member of <**insert-llc-name**>, a Florida limited liability company (the "Company"), and the Company.
This Operating Agreement governs the relationship between the Company and its members pursuant to the Florida Limited Liability Company Act (the "Act").
In consideration of their mutual promises, covenants, and agreements, the parties hereto do hereby promise, covenant and agree as follows:
For purposes of this Operating Agreement, and unless the context clearly otherwise indicates, the following terms shall have the following meanings:
"Act" -- Chapter 608, Florida Statutes, as amended from time to time.
"Agreement" -- This Operating Agreement.
"Code" -- The Internal Revenue Code of 1986, as amended
"Company" -- <**insert-llc-name**>, a Florida limited liability company.
"Member" -- <**parent-member**>, as the sole initial Member of the Company, and any other person or persons who may subsequently be designated as a Member of this Company pursuant to the further terms of this Agreement.
"Membership Interest" -- The rights of a Member in distributions and allocations of profits, losses, gains, deductions and credits.
"Membership Rights" -- The rights of a Member, which are comprised of : (1) his or her Membership Interest, and (2) his or her right to vote and to otherwise participate in the management and governance of the Company.
"Persons" -- Individuals, partnerships, corporations, limited liability companies, unincorporated associations, trusts, estates and any other type of entity.
1.1 Organization. The Member acknowledges the formation of the Company as a Florida limited liability company pursuant to the provisions of the Act.
1.2 Agreement. For and in consideration of the mutual covenants herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Member and the Company hereby agree to the terms and conditions of this Agreement, as it may from time to time be amended according to its terms. It is the express intention of the Member and the Company that the Agreement be the agreement of the parties, and, except to the extent a provision of the Agreement expressly incorporates federal income tax rules by reference to sections of the Code or Regulations or is prohibited or ineffective under the Act, the Agreement shall govern, even when inconsistent with, or different from, the provisions of the Act or any other law or rule. To the extent any provision of this Agreement is prohibited or ineffective under the Act, the Agreement shall be considered amended to the smallest degree possible in order to make the Agreement effective under the Act.
1.3 Name. The name of the Company is <**insert-llc-name**>, and all Company business shall be conducted under that name.
1.4 Principal Place of Business. The Company may locate its principal place of business and registered office at any place or places as the Member may from time to time deem advisable.
1.5 Registered Agent. The registered agent for the Company is and his or her address is as follows:
The Member may, from time to time, change the registered agent or the registered office through appropriate filings with the Secretary of State. In the event the registered agent ceases to act as such for any reason or the registered office shall change, the Member shall promptly designate a replacement registered agent or file a notice of change of address as the case may be.
1.6 Term. The Company shall continue until it is dissolved in accordance with either the provisions of this Agreement or the Act.
1.7 Permitted Business. The business of the Company shall be:
(a) to accomplish any lawful purpose whatsoever or which shall at any time appear conducive to or expedient for the protection or benefit of the Company and its assets;
(b) to exercise all other powers necessary to or reasonably connected with the Company's business which may be legally exercised by limited liability companies under the Act; and
(c) to engage in all activities necessary, customary, convenient, or incident to any of the foregoing.
2.1 Initial Contributions. The initial capital contributions to the Company of the Member shall be made concurrently with the Member's execution and delivery of this Agreement. The Member's initial capital contribution is $500.00. The Member shall not be required to make additional capital contributions.
2.2 Loans. In the event the capital needs of the Company exceed the capital contributions provided by section2.1, the Member may, but shall not be required to, loan additional monies to the Company in amounts and on terms and conditions to be agreed upon by the Company and the Member. The Company may also borrow money for its capital needs from any third parties in amounts and on terms and conditions determined by the Member.
2.3 Interest on and Return of Capital Contribution. The Member shall not be entitled to interest on any capital contribution, or to a return of any capital contribution, except as specifically provided for herein.
PROFIT AND LOSS
3.1 Percentages of Membership Interest. The percentages of Membership Interest of the Member shall be 100%.
4.1 Distributions. Cash distributions shall be made in such amounts and at such times as may be determined by the Member in its discretion.
4.2 Limitations on Distributions. No distribution shall be declared or paid unless, after the distribution is made, the Company's assets exceed the Company's liabilities. Liabilities to the Member on account of his Membership Interest shall not be a Company liability for purposes of this section.
RIGHTS AND DUTIES OF MEMBERS
5.1 Management Rights. The Company shall be managed by a Manager appointed by the Member. The Member may remove and replace the Manger at any time and for any reason. The Manager is the Company's agent and shall have authority to take all actions, including incurring debt, entering contracts, and acquiring and transferring property, on the Company's behalf and such actions shall bind the Company.
5.2 Liability of Members and Manager. Neither the Members nor the Manager shall be liable as such for the Company's liabilities, debts or obligations. The failure by the Company to observe any formalities or requirements relating to the exercise of its powers or the management of its business or affairs under this Agreement or the Act shall not be grounds for imposing personal liability on any of the Members.
5.3 Indemnification. The Company shall indemnify the Member and Manager for all costs, losses, liabilities and damages paid by the Member or Manager in connection with the Company's business, to the fullest extent provided or allowed by Colorado law.
5.4 Fiduciary Duties and Obligations. The Member shall have no fiduciary duties of loyalty or otherwise with respect to the Company.
All revenues of the Company shall be deposited regularly in the Company savings and checking accounts at such financial institutions as shall be selected by the Member.
ACCOUNTING AND RECORDS
7.1 Records. The Company shall maintain at its principal place of business or such other place as the Member may choose, the following:
(a) a current list of the full name and last-known business, residence, or mailing address of the Member, both past and present;
(b) a copy of the Articles of Organization and all amendments thereto, together with executed copies of any powers of attorney pursuant to which any amendment has been executed;
(c) copies of the Company's federal, state, and local income tax returns and reports, if any, for the three most recent years;
(d) copies of any currently effective written operating agreements, copies of any writings permitted or required under the Act, and copies of any financial statements of the Company for the three most recent years;
(e) minutes of any member meetings;
(f) unless contained in this Agreement or any amendment thereto or in a writing permitted or required under the Act, a statement prepared and certified as accurate by the Member which describes:
(i) the amount of cash and a description and statement of the agreed value of the other property or services contributed by each member and which each member has agreed to contribute in the future;
(ii) the times at which or events on the happening of which any additional contributions agreed to be made by each member are to be made;
(iii) if agreed upon, the time at which or the events on the happening of which a member may terminate his membership in the limited liability company and the amount of, or the method of determining, the distribution to which he may be entitled respecting his membership interest and the terms and conditions of the termination and distribution;
(iv) any right of a member to receive distributions which include a return of all or any part of a member's contribution; and
(v) any written consents obtained from members pursuant to the Act.
MEMBERSHIP INTEREST AND MEMBERSHIP RIGHTS OF A
DECEASED, INCOMPETENT OR DISSOLVED MEMBER
8.1 If a member who is an individual dies or if a court of competent jurisdiction adjudges a member who is an individual to be incompetent to manage the member's person or property, the member's executor, administrator, guardian, conservator, or other legal representative may exercise all the member's rights for the purpose of settling the member's estate or administering the member's property, including any power the member had to give an assignee the right to become a member.
8,2 If a member is a corporation, limited liability company, trust, or other entity and is dissolved or terminated, the powers of that member may be exercised by its legal representative or successor.
TRANSFER OF MEMBERSHIP INTEREST
9.1 Transfer. The Member may sell, hypothecate, pledge, assign or otherwise voluntarily, during the Member's lifetime or upon his death, transfer any part or all of his Membership Interest or Membership Rights in the Company to any other person. In the event the Member transfers his entire Membership Interest, the transferee(s) shall become a member without any further action, unless the Member and the transferee agree otherwise.
WITHDRAWAL OF MEMBER
10.1 Withdrawal of Member. The Member has the power to withdraw from the Company at any time.
DISSOLUTION AND TERMINATION
11.1 Events of Dissolution. The Company shall dissolve upon the occurrence of any of the following events:
(a) When the period fixed for the Company's duration expires;
(b) By the Member's written statement of dissolution; or
(c) By the entry of a decree of judicial dissolution pursuant to the Act.
11.2 Effect of Filing of Dissolving Statement. As soon as possible following the occurrence of any of the events specified in this section which effect the dissolution of the Company, an appropriate representative of the Company shall execute and file a statement of intent to dissolve in such form as shall be prescribed by the Florida Secretary of State. Upon the filing with the Florida Secretary of State of a statement of intent to dissolve, the Company shall cease to carry on its business, except insofar as may be necessary for the winding up of its business, but its separate existence shall continue until articles of dissolution have been filed with the Secretary of State or until a decree dissolving the Company has been entered by a court of competent jurisdiction.
11.3 Winding Up, Liquidation and Distribution of Assets.
(a) Upon dissolution, an accounting shall be made by the Company's independent accountants of the accounts of the Company and of the Company's assets, liabilities and operations, from the date of the last previous accounting until the date of dissolution. The Member shall immediately proceed to wind up the affairs of the Company.
(b) If the Company is dissolved and its affairs are to be wound up, the Members shall (1) sell or otherwise liquidate all of the Company's assets as promptly as practicable (except to the extent they may determine to receive any assets in kind), (2) discharge all liabilities of the Company (other than liabilities to the Member), including all costs relating to the dissolution, winding up, and liquidation and distribution of assets, (3) establish such reserves as reasonably may be necessary to provide for contingent liabilities of the Company, (4) discharge any liabilities of the Company to the Member other than on account of his interest in Company capital or profits, and (5) distribute the remaining assets to the Member:
(c) Upon completion of the winding up, liquidation and distribution of the assets, the Company shall be deemed terminated.
(d) The Member shall comply with any applicable requirements of applicable law pertaining to the winding up of the affairs of the Company and the final distribution of its assets.
11.4 Articles of Dissolution. When all debts, liabilities and obligations have been paid and discharged or adequate provision has been made therefor and all of the remaining property and assets have been distributed to the Member, articles of dissolution shall be executed in duplicate and verified by the person signing the articles, which articles shall set forth the information required by the Act.
11.5 Filing of Articles of Dissolution.
(a) Duplicate originals of such articles of dissolution shall be delivered to the Florida Secretary of State.
(b) Upon the filing of the articles of dissolution, the existence of the Company shall cease, except for the purpose of suits, other proceedings and appropriate action as provided in the Act. The Member shall thereafter be a trustee for creditors of the Company and as such shall have authority to distribute any Company property discovered after dissolution, convey real estate, and take such other action as may be necessary on behalf of and in the name of the Company.
11.6 Responsibility. Upon dissolution, the Member shall look solely to the assets of the Company for the return of his Capital Contribution. The winding up of the affairs of the Company and the distribution of its assets shall be conducted by the Member who is hereby authorized to take all actions necessary to accomplish such distribution, including, without limitation, selling any Company assets he deems necessary or appropriate to sell.
GOVERNING LAW; ATTORNEYS' FEES AND COSTS
12.1 Governing Law. It is the intent of the parties hereto that all questions with respect to the construction of this Agreement and the rights, duties, obligations and liabilities of the parties shall be determined in accordance with the applicable provisions of the laws of the State of Florida.
13.1 Inurement. This Agreement shall be binding upon, and inure to the benefit of, all parties hereto, their personal and legal representatives, guardians, successors, and assigns to the extent, but only to the extent, that assignment is provided for in accordance with, and permitted by, the provisions of this Agreement.
13.2 No Limit on Personal Activities. Nothing herein contained shall be construed to limit in any manner the Member or his respective agents, servants, and employees, in carrying out his separate businesses or activities.
13.3 Gender and Headings. Throughout this Agreement, where such meanings would be appropriate: (a) the masculine gender shall be deemed to include the feminine and the neuter and vice versa, and (b) the singular shall be deemed to include the plural and vice versa. The headings herein are inserted only as a matter of convenience and reference, and in no way define or describe the scope of the Agreement or the intent of any provisions thereof.
13.4 Severability. Nothing contained in this Agreement shall be construed as requiring the commission of any act contrary to law. In the event there is any conflict between any provision of this Agreement and any statute, law, ordinance or regulation contrary to which the Member or the Company have no legal right to contract, the latter shall prevail, but in such event the provisions of this Agreement thus affected shall be curtailed and limited only to the extent necessary to conform with said requirement of law. In the event that any part, article, section, paragraph or clause of this Agreement shall be held to be indefinite, invalid, or otherwise unenforceable, the entire Agreement shall not fail on account thereof, and the balance of the Agreement shall continue in full force and effect.
13.5 Membership Interest. The Member hereby covenants, acknowledges and agrees that the Membership Interest in the Company shall for all purposes be deemed personalty and shall not be deemed realty or any interest in the assets or property owned by the Company.
13.6 Not For Benefit of Creditors. The provisions of this Agreement are intended only for the regulation of relations between the Member and the Company. This Agreement is not intended for the benefit of creditors and does not grant any rights to or confer any benefits on creditors or any other person who is not a Member of the Company.
IN WITNESS WHEREOF, the parties have hereunto set their hands and acknowledged this Agreement and do hereby certify that the foregoing Agreement constitutes the Operating Agreement of <**companyname**>, a Florida limited liability company, adopted by the Member of the Company and the Company effective as of ________, 200__.
MEMBER: <**enter name of corporate member**>
By: _______________________________ Date: _____________
By its Manager: <**parent-member**>
By: _______________________________ Date: _____________
What is it?
The limited liability company (LLC) is a completely new form of doing business. It is NOT a corporation. It is NOT a partnership It is NOT a sole proprietorship. You do not call the owners stockholders or partners. You call them MEMBERS. You do not call the business a limited liability corporation (as many do). It is a limited liability company.
An LLC is a blend of some of the best characteristics of corporations, partnerships and sole proprietorships. It is a separate legal entity like a corporation but it is entitled to be treated as a partnership for tax purposes and therefore carries with it the "flow through" or "transparent" tax benefits that corporations do not have. It is very flexible and simple to run and, like a sole proprietorship, there is no statutory necessity to keep minutes, hold meetings or make resolutions which can trip up many corporation owners.
The LLC is a relatively new entity for the United States. They have existed for many years abroad and actually, the first LLC legislation in the United States was the Limited Liability Company Act of Wyoming in 1977. They didn't catch on right away because the IRS wouldn't give an LLC partnership tax classification as long as the members were exempted from personal liability for the company debts. It wasn't until 1988 that the position changed and since then all 50 states have enacted LLC laws. State statutes do vary and work is currently in progress on a uniform LLC law that will streamline formation in the nation.
The LLC is based upon a very important and guarded principle in America called the freedom to contract. Basically this means that the members are free to agree among themselves how the company is to be run and that agreement or contract will be upheld in the courts. When you combine that principle with the fact that no member is personally liable for the company debts and profits and/or losses are passed directly through (i.e. the LLC pays no tax itself) to the members you have the "super pass through entity" as it is being called. The limited liability company is becoming the entity of choice for business in every realm and will continue to gain momentum as more and more people learn of its existence.
Who Needs It?
Anyone who begins a new business venture should be concerned with certain basic truths. One sad but true fact is that the society is becoming more and more litigious every day and more and more unfortunate souls are finding themselves on the wrong side of law suits. Right or wrong the experience of defending a legal action is extremely stressful and debilitating. In my 20 plus years of practicing I have never found a person yet who relished being sued. So, with the preaching over with, the point is simple. If you can put a legal shield between you and creditors you should do it. The LLC is a completely separate entity. None of its members are personally liable for its debts whether they arise in contract or tort.
Another pretty obvious truth is that the government continues to take more and more from us in the form of taxes and that trend is not declining. The taxpayer has to be creative and take advantage of every possible break. The LLC does not pay any tax itself (which is not the case with corporations) and it qualifies for partnership tax status. The partnership tax rules are more flexible and give the tax planner a definite advantage over other forms of doing business. Anyone concerned with tax liability should consider doing business as a limited liability company.
And a final universal truth is that no one needs any more red tape in their life. Corporations are riddled with rules and regulations that can seriously jeopardize the benefits that the corporate form is intended to provide. The LLC was designed with simplicity and flexibility as its hallmarks. There is no need to keep exhaustive minutes, hold meetings, or make resolutions to, in effect, stay legal. This is a huge trap for the unwary and is the first place the IRS or an aggressive attorney will attack to "pierce the corporate veil" and go after the stockholders personally. If the records are not maintained perfectly the corporate protection is lost. The tax and legal consequences can be disastrous. The LLC statutes do not require any of this red tape for the members to keep their liability protection. The operating agreement can, for the most part, contain any procedures and rules that the parties desire and once put in place can just sit there maintenance free. The initial drafting of the operating agreement is very important because it must comply with state and IRS regulations so that the LLC will be taxed as a partnership and not as a corporation.
Need to raise money for a real estate or venture capital project? The LLC is a perfect vehicle. Admitting new members is a simple process and there are no limits as to the number and/or character of additional investors. They can include all types of individuals, corporations, trusts, pension plans, foreigners (both out of state and out of the country). This is certainly not the case with the corporate structure, especially the subchapter S corporation.
Why Should I Care?
You obviously do care if you have read this far. If you are in the formation stage of a new business now is the perfect time to set it up correctly. Let's face it; once you get involved in actually operating a new concern there is no time to do anything else if you expect to be successful. If you ask most of your friends that have corporations if their minutes and resolutions are up to date and if they are actually holding their yearly meetings as required the answer is uniformly going to be "are you kidding, I barely have time to ...!." They are sitting ducks for law suits and IRS audits that will brush aside that corporation as if it never existed. Human nature is what it is and, unfortunately, procrastination is part of it.
The business owner today has to avail himself of the protections that the law provides. Not to do so does not make common sense nor does it set him up for success. Whatever decision is made as to the form of business that is selected, whether it be a partnership, corporation, LLC or sole proprietorship it needs to be thought out and put in place at the outset. The limited liability company does have the benefit of simplicity of operation and was designed with the small business owner in mind. Once in place it does not need ongoing high maintenance and can be modified extremely easily to reflect changed circumstances or objectives. The bottom line is that none of this is going to help after the fact. The most recent example I can relate is the travel agency owner that called and wanted to know how fast she could form an LLC to protect her personal assets from lawsuits. A dispute over a $65.00 ticket had mushroomed in to a $2500.00 claim. I couldn't help her. The law suit had been filed already and both she and her travel agency were named in the suit. If an LLC had been in place she would not have been a proper defendant and could not have even been named. Have I made the point? You should care.