What is an LLC?

A limited liability company, or “LLC,” is comprised of members who are the owners of the LLC. Their ownership interest is based on their percentage of the total “membership units” of the LLC. Membership units are analogous to stock in a corporation, although there are some differences.

All Florida LLCs are presumed to be member-managed, and all members have authority as agents of the LLC to bind the LLC contractually. However, an LLC may choose to be manager-managed. Generally, if an LLC has a small number of members and all of the members expect to be directly involved in the company’s operations, a member-managed structure is usually the right choice. If the LLC has many members (there are no limits on the number of members an LLC can have), it may be impractical or impossible for the members to manage the company. It may also be the case that most or all of the members prefer not to be involved in the day-to-day operations of the company and rather to just be investors. In those situations, the members can elect to hire managers.

The decision to be manager-managed is not required to be publicly filed in the Articles of Organization (although it can be), rather it will be described in the LLC’s operating agreement and/or other non-public documents (such as minutes or member meetings). An operating agreement is an agreement among the members of the LLC governing the member’s financial and managerial rights and duties as well as the appointment of managers, if any. Among other things, it also describes how ownership of the LLC is structured and funded, how members may acquire or sell their membership units and what happens when members leave, when new members are added to the LLC and when the LLC ceases operations. The operating agreement is the principal governing document of an LLC. An operating agreement is not a requirement for Florida LLCs however it is strongly advised.

Widerman Malek, PL can draft your LLC’s operating agreement if you’ve chosen that option as part of the LLC formation package. We can also help you decide whether a member-managed or manager-managed structure is the correct choice for your company.

Unlike a corporation, there is no requirement that a company have directors or any sort of governing board. However, many LLCs elect to have a board of managers which, if formed, would operate very much like a corporation’s board of directors, which is discussed in Section 2 below concerning corporations.

Managers may be given titles such as “president” or “vice president” and in some cases, managers will enter into employment agreements with the LLC.