Revised Florida LLC Legislation in 2021

Limited Liability Companies (LLCs) present an effective method of conducting business due to the flexibility their use affords, with passthrough taxation and limited liability for the debts of an LLC. The recently passed Florida Revised Limited Liability Company Act updates the legal framework for creating and maintaining an LLC, so should be of interest to anyone keen to establish an LLC.

Formation Requirements and Registered Agent Duties

Under the Florida Revised Limited Liability Company Act there are several required pieces of information for an LLC to be formed. Firstly, a name for the LLC must be submitted that is permitted under the Florida LLC naming requirements. These maintain that the name of the company must contain the words “limited liability company” or its abbreviated form “LLC” as this clearly indicates it’s a company as opposed to a natural person.

Additionally, the name has to be distinguishable in the records of the department from the names of all other entities on file (unless with the written consent of the other entity if filled at the time of registration). Finally, an LLC cannot contain language in its name that implies its connected with a state or federal government.

The second and third formation requirements of LLCs are: (1) the street and mailing address of the LLC’s principal office, and (2) the registered agent’s name, Florida address, and signature of acceptance.

Operating Agreement

LLC operating agreement allows LLC members to create rules for how their unique LLC operates; they are often referred to as ‘terms’ or ‘provisions’. These provisions are limited by state statute, and cannot be used as a method of circumventing them. For example, if it was in Florida’s state law that an LLC could not be dissolved without unanimous agreement, this could not sidestepped with a term in the operating agreement.

Having an operating agreement in place makes it easier to navigate situations involving the operation of the LLC. Additionally, if a lawsuit or dispute arises, LLC members have something to reference so as to navigate the litigation as efficiently and promptly as possible.

Some LLCs though, such as those providing professional services (i.e. lawyers, doctors, accountants, etc.) or real estate services, might need unique terms on top of this.

Annual Report Requirements

Florida LLC laws state LLCs must submit an annual report containing the following information: the name of the LLC; the street address of the principal office and mailing address; the date of the organization (for domestic LLCs) or date of qualification (for foreign LLCs); an Employee Identification Number (EIN); and the name, title, and address of at least one member of the manager.

These annual reports are due between January 1st and May 1st each year. The first annual report is due a calendar year following the LLC’s establishment. For Florida businesses completing an interest exchange, the due date is the 31st of December. Additional reports filed in a single calendar year will be considered amended reports.

Closing Remarks

By identifying additional categories for which managers or members of an LLC may not receive damages, the Florida Revised Limited Liability Company Act expands the limits of indemnification. This includes violations of the statutory standards of conduct as well as defalcations, or funds misused by those in charge

Before this statute, the only way for entities and persons to become members of an LLC was as economic ones, now they can become non-economic members of LLCs. This means they do not possess contribution obligations, a right to distributions or transferable interest.

The manner in which operating agreements are implemented and function was also altered by this Act. Since its enactment, the operating agreement can: remove members from their duties or shift them to others; take precedence over the articles of organisation where any conflict arises between the two; and be established in a record, oral or implied medium.