Business Formation
For some individuals, forming a business in Florida can be easy. For others, it could be quite difficult. There is more than just filing articles of incorporation with the Department of State. You may require an operating agreement.
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Who needs an operating agreement? In some cases, banks and companies require an operating agreement to proceed with loan disbursements. An operating agreement can even protect you if you are being sued in Court. One of the first things a Judge looks for is the operating agreement to determine whether the company is a valid company and whether you have working and operating as you should be.
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When creating an operating agreement, questions to ask yourself include:
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Owners: How many individuals will own the business? Do you anticipate selling some of the company in the future? Is there equal voting across the owners, or is voting rights determined based on the amount of capital invested?
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Management: How the business will be managed? Managed by owners, or managers, or both? What actions or authority does a manager have?
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Profits and Losses: How you will allocate the profits and losses of the company? When will distribute the profits?
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Transfer of Interest: How and when an owner may transfer his or her interest in the Company. Are there any rights to the other owners of preventing the sale to an unknown party?
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Taxation: How you will elect to be taxed. Have you consulted with a CPA in this regard?
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Business: What type of business is the company authorized to engage in? The type of business could also determine the frequency of profit allocation and also what tax status to elect.
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Business Termination: How would the company wind down? What debts or owners are paid? How are assets of the company distributed or sold?
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Even if your company is wholly owned by you and you intend to keep it owned by yourself only, these are things to consider in the unfortunate situation you are being sued by a customer or client.
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Contact an Attorney today for a discussion or assistance in creating your new company. Even if you have an existing company, it is not too late to create an operating agreement.
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