Forming a Florida Limited Liability Company: a Checklist

Getting any business off the ground involves strategy surrounding what type of business formation you choose to undertake.

The chosen business type depends on the unique goals and objectives of the business in question.

Many businesses choose to set up a Limited Liability Company in Florida, but there are important considerations that must be addressed when going with this type of business type.

Getting started with a Florida Limited Liability Company

When forming a Limited Liability Company (LLC) in Florida, there are several factors that must be addressed.  The following eight steps are the most critical to consider:

• Selecting and securing a company name
• Assigning a resident agent and registered office
• Drafting and filing the company’s Articles of Organization
• Drafting an Operating Agreement
• Tax considerations
• Employment Withholding matters
• Business Licenses and Permits
• Registering as a foreign LLC in other jurisdictions.

Select a Name for your LLC

• Naming requirements
  • Your name must contain the words “limited liability company” or the abbreviation “L.L.C.” or “LLC,” clearly indicating that it is a limited liability company instead of a natural person, partnership, corporation, or other business entity. Stat. Ann. § 605.0112(1)(a).
  • Your name must be distinguishable from other names registered in the records of the Florida Department of State (DOS) Division of Corporations. You can check whether a name appears to be available by searching the Florida DOS’s entity search page at http://search.sunbiz.org.
  • Use of certain terms (e.g., “insurance”, “bank”, or “college”) may require additional approvals.
  • Your name cannot falsely imply any government affiliation (e.g., contain the word “IRS”)
  • Your name cannot be misleading as to the purpose of your LLC.
  • Your name may be in a foreign language, but it may consist only of English letters and Arabic and/or Roman numerals.

 Designate a Registered Agent and Registered Office

• In Florida, you must designate and maintain a registered agent and registered office for your LLC. Stat. Ann. § 605.0113. This requirement is because a registered agent and registered office are necessary to receive service of process and required notices within the state.
• Your registered agent must be either (a) an individual resident of Florida, or (b) an authorized foreign or domestic entity authorized to transact business in Florida.
• The registered office must be located in Florida and may, but need not, be a place of the LLC’s business in Florida. The address must be a street address and cannot be a post office box.

Draft and File the Articles of Organization

The Articles of Organization is the primary organizational document of a Florida LLC and must be filed with the Florida DOS.

• Required elements for the Articles of Organization
  • Name of the LLC
  • Street and mailing address of the LLC’s principal office
  • Name, street address in Florida, and written acceptance of the LLC’s registered agent
  • Must be in English
• Permissible elements
  • Whether your LLC is manager-managed
    • For a manager-managed LLC, the names and address of one or more managers
    • For a member-managed LLC, the names and address of one or more members
  • Description of the authority or limitation on the authority of a specific person in the LLC or a person holding a position or having a specified status in the LLC
  • Any other matters you may consider relevant
  • The effective date of the Articles
• The articles may be filed online and requires a filing fee of $100.

Draft the LLC Operating Agreement

While Florida law does not require an LLC to have an operating agreement, it is prudent to have one. The operating agreement should address the following issues:

• Whether your LLC is member-managed or manager-managed
• The procedures for allowing and expelling members
• Management rights and authority of each member, including different classes of members and the relative rights and responsibilities of each class
• Allocation of profits, losses, and distributions among members and different classes of members
• Any initial capital contribution required of members
• Whether there are different series within the LLC
• Notice and procedure required for member meetings
• Voting rights and power of members
• Procedure for amending the articles of organization or the LLC operating agreement
• Rights and powers of managers, including whether there are multiple classes of managers and the duties and voting powers of each
• Procedures for electing and removing managers
• Indemnification of members and managers by the LLC

Tax Considerations

• Federal taxes.
• Obtain a federal Employer Identification Number (EIN) from the IRS.
• Single-member LLC – must elect to be taxed as a corporation, otherwise, its owner is personally liable for all federal taxes as if the LLC did not exist.
• Multi-member LLC – will automatically be taxed as a partnership unless you elect to be classified as an association and taxed as a corporation.
• In addition to federal income tax, an individual must pay self-employment tax on her distributions.
• State taxes.
  • Income tax and net worth tax
    • A Florida LLC is classified based on its federal income tax classification, meaning that it is disregarded for a sole member, or taxed as a partnership or corporation, depending on election.
  • Sales and use tax
    • In Florida, if your LLC’s business involves providing or selling taxable goods or services, you must collect and pay sales and use tax.
    • You can register your LLC with the Florida Department of Revenue using the online registration system.

Employment Withholding Matters

• If your LLC will have employees, then you must withhold federal income and other taxes (e.g., Social Security and Medicare) and must register with the Florida Department of Revenue for payment of state reemployment tax.

Business Licenses and Permits

• You may need to obtain federal, state, and/or local occupation-specific permits, licenses, or other authorizations. You should contact your county and municipal government to determine if any special licenses or permits are required for your type of business.

Registering as a foreign LLC in other jurisdictions

You should register as a foreign entity in any other jurisdiction that your LLC will conduct business.

Failing to satisfy any one of these requirements can be detrimental to a small business. To fully understand how each of these steps may affect you and your business, it’s always advisable to speak with an experienced business law attorney.

Conclusion

While setting up your business is the first step on the road to its success, choosing the right vehicle is critical to the long-term planning and strategy of your new venture.

In Florida, the Limited Liability Company is a popular business formation that provides versatility and protection for Florida business owners.

However, in order to effectively utilize the power of a Florida Limited Liability Company, it is imperative that a business owner is familiar with all aspects of the LLC to take advantage of the benefits of this business type.

If you are in need of assistance with the professional setup of your new Florida Limited Liability Company, please contact us to speak to our business law attorney today!