Business formation folders and a closed laptop on a lamp-lit desk, Florida LLC Operating Agreement

Florida LLC Operating Agreement: What Chapter 605 Fills In If You Don't

Florida LLC Operating Agreement: What Chapter 605 Fills In If You Don't

A Florida LLC can exist without a written operating agreement. The state does not require one, you do not file one with the Florida Department of State, and no state form asks for it. The gap shows up later. Without a signed agreement, the Florida Revised LLC Act (Chapter 605) supplies the rules for how your company is run, how money moves, and how an owner leaves. Those default rules were written for every LLC in the state, not for yours.

This guide covers what Chapter 605 fills in, where the defaults cause problems, and why a Florida single member LLC should look at its operating agreement more closely than most owners do.

Informational note: This article is general information, not legal or tax advice. Ownership, liability, and tax treatment depend on your facts. Consult a qualified Florida attorney and a CPA before you adopt an operating agreement or a template.

Florida does not require an operating agreement

You form a Florida LLC by filing Articles of Organization with the Florida Department of State, Division of Corporations (Sunbiz). The required fee is $125: a $100 filing fee plus the $25 registered agent designation. Sunbiz states that online filings are processed in the order received and that no guaranteed turnaround is published, so do not plan a launch date around an assumed processing time. The articles are public record. The operating agreement is not filed with the state. Keep the signed copy with your company records.

Florida has no state franchise tax on LLCs and no personal income tax. The state filing you cannot skip is the annual report. It costs $138.75 and is filed each year between January 1 and May 1.

What Chapter 605 fills in

Chapter 605 sets default terms for the core questions an operating agreement answers: how the company is managed, how votes are counted, how profits and distributions are shared, whether an owner can sell or transfer an interest, how a new owner joins, and how the company is wound up. If your owners never wrote anything down, the defaults govern every one of those questions.

The defaults can work for a simple company with one owner who runs it. They fit poorly almost everywhere else. Two partners who contribute different amounts of money or work may find that the default split of profits does not match what they agreed to in conversation. An owner who dies or wants out may find that the statute, not the family or co-owner, decides what happens to the interest. The default rules do not know what you intended, and banks and courts will not guess at it for you.

A written agreement lets you replace most defaults with your own terms. The agreement controls only within the limits the statute allows, so it should be drafted to Florida law, not copied from an out-of-state template.

Florida LLC manager vs member: choose the structure in writing

Two terms cause the most confusion. A member is an owner. A manager is the person or people who run the company. An owner can be both a member and a manager, and a manager does not have to own anything.

A Florida LLC is managed in one of two ways. In a member-managed LLC, the owners run the business and make decisions together. In a manager-managed LLC, one or more designated managers handle day-to-day decisions, and the members may be passive investors. Florida LLCs are member-managed unless the articles of organization or the operating agreement expressly provide otherwise. If you want a manager-managed structure, say so in the articles and reflect it in the operating agreement. Confirm how the filing handles this on the Sunbiz eFile form before you submit, because the wording you file controls.

The agreement should answer what the label does not: who may sign contracts, who may open or close bank accounts, which spending needs a second approval, how decisions are made, and how a manager can be replaced. If you choose manager-managed, spell out the manager's authority and the members' right to remove that person. Without those terms, a manager may have more or less power than you intended.

The Florida single member LLC and the asset protection question

Many owners form a Florida single member LLC to keep business debts separate from personal assets. The LLC generally shields owners from company debts. The harder question is what happens when a creditor comes after one owner personally for an unrelated debt.

Under the usual charging order rule, a creditor of a member gets a lien on that member's distributions. The creditor does not normally gain the right to take over the business or its assets. Florida law, including s. 605.0503 and the Olmstead decision, carves out an exception for single-member LLCs, so a creditor may have options beyond a charging order. Whether that exception applies, and how far it reaches, depends on the facts of a specific case.

This is where the operating agreement matters. A written agreement that spells out distributions, transfers, and management, combined with separate bank accounts and records, documents that the company is run as its own entity. Some owners also ask whether adding a second member changes the picture. That step has legal and tax consequences. Ask an attorney before you admit anyone or restructure ownership to address creditor risk, and do not add a nominal member without advice.

Why banks ask for the operating agreement

Banks ask for the operating agreement because it answers questions the Articles of Organization do not: who owns the company, who has signing authority, and whether one person can act alone. Many banks request it when you open a business account, and some ask again when a signer changes. Before you visit a branch, ask what documents it requires. Bring the articles, your federal EIN confirmation, your photo ID, and the signed agreement. Print a Sunbiz record showing your exact legal name and active status as well.

A bank only evaluates the document you show it. An agreement with missing signature pages or unsigned amendments is a common reason for delay, so check that every page is complete before you go in.

What a Florida operating agreement should cover

Use this list when you meet with your attorney:

  • The exact legal name and principal address, matching the Sunbiz filing. A name must end in LLC, L.L.C., or Limited Liability Company, and it must be distinguishable on state records.
  • The registered agent. Every Florida LLC must designate a registered agent with a Florida street address (no P.O. Box). The agent must sign to accept the appointment, and the designation carries a $25 fee. Changing the agent later costs the same $25.
  • Each member, their contribution, and their ownership percentage
  • Management structure, manager authority, and removal rules
  • Voting thresholds for major decisions
  • Distribution policy and how profits and losses are allocated
  • Transfer restrictions, buy-sell terms, and what happens when a member dies, divorces, or files for bankruptcy
  • Admission of new members
  • Banking and signing authority
  • Tax classification and related distribution terms, coordinated with your CPA
  • Dissolution and winding up
  • How the agreement is amended and who must sign amendments

Tax classification affects what the agreement should say about distributions. An LLC classified as a partnership or disregarded entity generally does not file a Florida corporate income tax return. However, a Florida Partnership Information Return is required if one or more owners is a corporation, and any corporate owner must file its own Florida return. An LLC classified as a corporation for federal tax purposes pays the 5.5% Florida corporate income and franchise tax. Confirm the details with a CPA before you finalize the tax terms.

Licenses, the business tax receipt, and sales tax

Florida has no general statewide business license, so an operating agreement does not replace any permit you need. Two other requirements are separate. First, if your work is regulated, the Department of Business and Professional Regulation (DBPR) licenses many professions and trades, including contractors, cosmetology, real estate, restaurants, CPAs, and engineers. Second, many cities and counties require a local Business Tax Receipt for the address where you operate. The Business Tax Receipt is a local tax under Chapter 205. It is not a competency license, and not every county or city levies it. Check with your county or city office for your location.

If you sell taxable goods or services, register as a sales and use tax dealer with the Florida Department of Revenue before you begin business. The state sales tax rate is 6%. The registration page is at floridarevenue.com.

Common mistakes to avoid

  1. Assuming the default profit split matches what you agreed to informally.
  2. Leaving out a buy-out plan, so a partner's exit becomes a dispute.
  3. Using a generic online template without Florida review.
  4. Failing to update the agreement after an ownership change or a new bank signer.
  5. Missing the annual report. A $400 late fee applies to reports received after May 1, bringing the total to $538.75. Failure to file by the third Friday in September leads to administrative dissolution.

Official resources

An operating agreement is where your intentions become enforceable terms. Write down what you decided, have a Florida attorney draft or review the document, and get a CPA's view on tax classification before you sign. This article is informational, not legal or tax advice.

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