Florida LLC Formation Guide

LLCs, or limited liability companies, are the most popular business structure in Florida. Florida LLCs offer more liability protection than corporations with a flexible tax structure.

When forming or updating a Florida LLC, it is crucial to consider state-law considerations. Because the laws of each state are different, the LLC’s formation documents—especially the Florida operating agreement—must be prepared to meet Florida’s specific requirements. This article discusses how to form Florida LLCs that meet the requirements of Florida law.

How are LLCs formed in Florida?

All Florida LLCs are governed by two primary documents:

1. Articles of organization. The articles of organization are the public organic record needed to begin the LLC’s existence under Florida law.¹ As discussed below, the articles of organization contain the minimum information needed to name the LLC identify the registered agent.
2. Operating agreement. The operating agreement includes the private organic rules that govern the internal affairs of the LLC.² The operating agreement is a blueprint for LLC operations, including governance of the LLC and distribution of LLC profits.

A Florida LLC is formed when it files its articles of organization with the Division of Corporations of the Florida Department of State. The articles of organization are a simple, short form that includes the minimum amount of information needed to notify the Division of Corporations of the LLC’s existence. It does very little to structure the LLC to accomplish the owners’ objectives.

What is a Florida operating agreement?

A Florida operating agreement is a legal document that serves as a blueprint for LLC operations, including control of the LLC, distribution of profits, and the rights and duties of LLC members and managers.³

A Florida operating agreement is the most important LLC formation document. It provides the framework for how the LLC will be governed. Without a valid operating agreement, LLC owners are left to the default provisions of the Florida Revised Limited Liability Company Act to govern the most crucial LLC planning opportunities. A well-drafted operating agreement should:

• Specify who controls the LLC and how the LLC may act. Different states have different default laws governing control of the LLC. To avoid relying on these fallback provisions, the operating agreement should specify the management structure and be clear about what is necessary to constitute an action by the LLC. The management structure should also be designed with creditor protection in mind. When structured properly, a manager-managed structure can provide enhanced creditor protection.
• Provide clear rules for profit distribution. Different states have different laws regarding how profits and losses are allocated among the members of an LLC. These laws may not match the member’s intent. The operating agreement should specify the member’s economic rights. Depending on how the LLC is structured, tax distribution provisions may be necessary to deal with the phantom income problem.
• Maximize liability protection. The operating agreement should be designed to provide maximum protection to both the LLC itself and each member (both inside and outside liability). This requires strategic thinking to ensure that the operating agreement reflects the LLC’s substantive business arrangement while simultaneously making the LLC unappealing to a creditor if a dispute arises. Care should also be given to adequate LLC documentation—including an organizational action without a meeting as discussed below–to prevent veil piercing claims.
• Define differences in voting rights for different classes of equity. If the LLC will have classes of equity that differ in either economic or voting rights, these classes should be created and clearly defined in the operating agreement.
• Protect against unintended spousal ownership. The family law of some states can give a spouse an interest in an LLC by operation of law. This may be unacceptable to other LLC members who don’t want to be surprised to find themselves in business with their business partner’s spouse. The operating agreement should include provisions and waivers to deal with unintended spousal ownership of the LLC.
• Clarify fiduciary duties. States have different approaches to fiduciary duties. Many rely on a patchwork of case law and statutes with lots of gray areas. The operating agreement should include customized fiduciary duty provisions that match the owners’ specific intent.
• Take advantage of tax flexibility. Of all types of business entities, LLCs offer the most flexible tax structure. The operating agreement should specify a tax-efficient tax classification to optimize tax-planning opportunities.

What is the Florida Revised Limited Liability Company Act?

The Florida Revised Limited Liability Company Act, enacted in 2013, governs all limited liability companies formed under Florida law. The Florida Revised Limited Liability Company Act is found in Chapter 605 of the Florida Statutes. The Florida Revised Limited Liability Company Act became effective January 1, 2014, and the prior act (the Florida Limited Liability Company Act) was repealed on January 1, 2015.

How does the Florida Revised Limited Liability Company Act relate to the operating agreement?

The Florida Revised Limited Liability Company Act anticipates that each Florida LLC will have a valid operating agreement. The Act is clear that the operating agreement governs:

1. Relations among the members as members and between the members and the LLC.
2. The rights and duties under the Florida Revised Limited Liability Company Act of a person in the capacity of manager.
3. The activities and affairs of the LLC and the conduct of those activities and affairs.
4. The means and conditions for amending the operating agreement.⁴

These matters deal with the so-called “internal affairs” of the LLC. The provisions of the Florida Revised Limited Liability Company Act only apply if the operating agreement is silent on these matters.⁵

The Florida Revised Limited Liability Company Act can be thought of as a set of default provisions for LLCs that fail to plan properly through an operating agreement. If the operating agreement covers a matter, it becomes the law of the LLC in connection with that matter.

Does the Florida Revised Limited Liability Company Act limit what the members can agree to in the operating agreement?

As stated above, the general rule is that each Florida LLC is governed primarily by its operating agreement. For most matters, if there is a conflict between the operating agreement and the Florida Revised Limited Liability Company Act, the operating agreement controls. But there are exceptions. The Florida Revised Limited Liability Company Act identifies a specific list of provisions of Florida law—called non-waivable provisions—that cannot be changed by the operating agreement.⁶ A Florida LLC operating agreement may not:

1. Vary a limited liability company’s capacity to sue and be sued in its own name;⁷
2. Change the requirement that Florida law governs Florida LLCs;⁸
3. Vary the requirements of Florida law regarding appointment of a registered agent or the requirements to file with the Florida Secretary of State;
4. Change the provisions of Florida law that allow third parties to petition a Florida court to enforce a required LLC filing;⁹
5. Eliminate the duty of loyalty or the duty of care (but See below for permitted modifications);¹⁰
6. Eliminate the obligation of good faith and fair dealing (but the operating agreement may prescribe the standards by which the performance of the obligation is to be measured if the standards are not manifestly unreasonable);¹¹
7. Relieve or exonerate a person from liability for conduct involving bad faith, willful or intentional misconduct, or a knowing violation of law;
8. Unreasonably restrict the LLC’s duties to keep records and the rights of a member (current or dissociated) or manager to access those records (but the operating agreement may impose reasonable restrictions on the availability and use of information and may define appropriate remedies, including liquidated damages, for a breach of a reasonable restriction on use);¹²
9. Vary the grounds for judicial dissolution (but a deadlock resolution mechanism is not considered a variance);¹³
10. Vary the requirement to wind up a dissolved LLC’s business, activities, and affairs;¹⁴
11. Unreasonably restrict the right of a member to maintain a direct action against another member, a manager, or the LLC to enforce the member’s rights or to maintain a derivative action to enforce the LLC’s rights;¹⁵
12. Vary the rules applying to a special litigation committee in a derivative action (but the operating agreement may provide that the LLC may not appoint a special litigation committee, as long as it does not prevent a court from appointing doing so);¹⁶
13. Vary the right of a member to approve a merger, interest exchange, or conversion;¹⁷
14. Vary the required contents of a plan of merger, a plan of interest exchange, a plan of conversion, or a plan of domestication;¹⁸
15. Except as explicitly permitted in the rules that govern operating agreements, restrict the rights under this chapter of a person other than a member or manager;¹⁹ or
16. Provide for indemnification for a member or manager²⁰ for any of the following: (i) conduct involving bad faith, willful or intentional misconduct, or a knowing violation of law; (ii) a transaction from which the member or manager derived an improper personal benefit; (iii) a circumstance under which the member or manager is liable for an improper distribution;²¹ or (iv) a breach of fiduciary duties or obligations or the duty of good faith and fair dealing,²² taking into account a permitted restriction, an expansion, or an elimination of such duties and obligations.²³

Clarifying the Application of Non-Waivable Provisions

After listing the mandatory (non-waivable) provisions, the statute provides specific rules for a handful of common LLC operating agreement provisions. The operating agreement may:

1. Specify the method by which a specific act or transaction that would otherwise violate the duty of loyalty may be authorized or ratified by one or more disinterested and independent persons after full disclosure of all material facts; or
2. Change the rules applying to improper distributions so that a distribution is considered proper as long as the LLC’s assets exceed its liabilities.²⁴

Under the Florida Revised Limited Liability Company Act, duty follows responsibility. If the operating agreement relieves a member of a responsibility and assigns to someone else, the operating agreement may eliminate or limit that member’s duty or obligation.²⁵

The “Manifestly Unreasonable” Standard

The Florida Revised Limited Liability Company Act also follows the “manifestly unreasonable” approach of the Revised Uniform Limited Liability Company Act (RULLCA). Under this approach, an operating agreement may do any of the following, as long as the provision is not “manifestly unreasonable:”

1. Alter or eliminate the aspects of the duty of loyalty;
2. Identify specific types or categories of activities that do not violate the duty of loyalty;
3. Alter the duty of care (but not to authorize willful or intentional misconduct or a knowing violation of law); or
4. Alter or eliminate any other fiduciary duty.²⁶

It is up to a court to decide whether a specific operating agreement provision is “manifestly unreasonable” following the guidelines described in the statute.²⁷ These rules require the court to evaluate reasonableness based on the circumstances existing at the time that the term became part of the operating agreement.²⁸ The court can only invalid the provision if it is “readily apparent” the objective of the term is unreasonable or that the term is an unreasonable way to achieve the objective.²⁹

How much does it cost to form a Florida LLC?

The cost to form a new Florida LLC depends on three factors:

• Document preparation fees. Proper LLC formation requires preparation of a Florida operating agreement that is tailored to the goals of the LLC owners, as well as an organizational resolution and related documents needed to structure the LLC. The cost of document preparation can vary depending on the provider. Although the articles of organization is a simple form that can be completed online, the remaining documents—including the operating agreement and organizational resolution—involve legal considerations that require knowledge of the intricacies of Florida LLC law.
• Filing fees. Each new Florida LLC formation requires filing fees. The fee to file the articles of organization with the Division of Corporations is $125.00. That amount includes $100.00 for the articles of organization and $25.00 for the designation of the registered agent.
• Registered Agent cost. As stated below, each Florida LLC must appoint a registered agent to receive legal documents on the LLC’s behalf. Although nothing prevents a Florida resident from serving as registered agent, many LLC owners prefer to use a registered agent for professionalism and to prevent junk mail. Florida registered agent fees are usually $100.00 to $200.00 a year.

What are the filing procedures for Florida LLCs?

As part of the LLC formation process, the LLC’s articles of organization must be filed with the Division of Corporations at the Florida Department of State. The articles of organization may be either hand-delivered or mailed to the following address:

The articles of organization can also be e-filed online through the Division of Corporations website.

What ongoing reporting requirements apply to Florida LLCs?

Each Florida LLC must file an annual report each year. The report is due in the year following the year in which the LLC is formed. It must be filed electronically online between January 1 and May 1. The fee for the annual report is $138.75.

It is important to file the report on time. If the report is filed after May 1, a $400 late fee is added to the annual report filing fee. Late fees cannot be waived.

What are the types of Florida LLCs?

Florida law recognizes several different types of LLCs, including domestic LLCs, foreign LLCs, and professional LLCs.

Florida Domestic LLCs

The Florida Revised Limited Liability Act uses the term domestic to refer to an LLC that is formed in Florida.³⁰  Most Florida LLCs are domestic LLCs.

An LLC that was formed under the law of a different state can become a Florida domestic LLC through a process known as conversion (also known as domestication in some other states).

Florida Foreign LLCs

Florida law uses the term foreign to describe a business entity that was formed in a jurisdiction other than Florida.³¹ Under this definition, an LLC that is formed in another U.S. state—Texas or California, for example—is considered a foreign LLC. If the LLC was formed outside of the United States, it is called a Non-United States entity under Florida law.³²

To transact business in Florida, a foreign LLC must obtain a certificate of authority from the Division of Corporations of the Department of State.³³ The certificate of authority is obtained by filing a written application with the Division of Corporations on the state-provided form. The application must include a certificate of existence (or an equivalent document) from the state of formation that is dated no later than 90 days before the application is filed.

The requirement to obtain a certificate of authority depends on whether the foreign LLC is “transacting business” in Florida.³⁴ It is not always clear what activities are considered “transacting business.”

It is clear that ownership income-producing property located in Florida does constitute “transacting business” in Florida for the purpose of the registration requirement.³⁵ It is also clear that the following activities, standing alone, do not constitute “transacting business” in Florida:

1. Maintaining, defending, or settling a lawsuit;
2. Holding meetings of the managers or members or carrying on other activities concerning internal company affairs;
3. Maintaining bank accounts;
4. Maintaining managers or agencies for the transfer, exchange, and registration of the foreign LLC’s own securities or maintaining trustees or depositaries with respect to those securities;
5. Selling through independent contractors;
6. Soliciting or obtaining orders, whether by mail or through employees, agents, or otherwise, if the orders require acceptance outside Florida before they become contracts;
7. Creating or acquiring indebtedness, mortgages, and security interests in real or personal property;
8. Securing or collecting debts or enforcing mortgages and security interests in property securing the debts;
9. Transacting business in interstate commerce;
10. Conducting an isolated transaction that is completed within 30 days and that is not one in the course of repeated transactions of a like nature;
11. Owning and controlling a subsidiary corporation incorporated in or LLC formed in, or transacting business within, Florida, voting the stock of any such subsidiary corporation, or voting the membership interests of any such LLC, which it has lawfully acquired;
12. Owning a limited partner interest in a limited partnership that is transacting business within Florida, unless the limited partner manages or controls the partnership or exercises the powers and duties of a general partner; and
13. Owning, without more, real or personal property (but See above for income-producing property).³⁶

If the LLC is doing business in Florida in any capacity and does not fall within one of these exceptions, it is usually best to register the LLC as a foreign LLC.

Florida Professional LLCs

Florida law recognizes professional LLCs. Section 621.051 of the Florida Statutes provides:

A group of professional service corporations, professional limited liability companies, or individuals, in any combination, duly licensed or otherwise legally authorized to render the same professional services may organize and become members of a professional limited liability company for pecuniary profit under the provisions of [the Florida Revised Limited Liability Company Act] for the sole and specific purpose of rendering the same and specific professional service.”³⁷

When coupled with the broad language of the Florida Revised Limited Liability Company Act allowing a Florida LLC to be formed for “any lawful purpose,” this provision authorizes professional LLCs in Florida.³⁸

For purposes of these rules, professional service is any type of personal service to the public that requires a license or other legal authorization to render the service.³⁹  To qualify as a professional LLC, the LLC must be formed for the “sole and specific purpose” of rendering professional services, and each member of the LLC must be licensed to render the same professional service.⁴⁰

Florida Nonprofit LLCs

A nonprofit LLC is an LLC that is formed for purposes other than profit. It is most often used to refer to an LLC that is intended to qualify for tax exemption under Section 501(c)(3) of the Internal Revenue Code (called a tax-exempt LLC). While Florida Revised Uniform Limited Liability Company Act does not contain extensive provisions for nonprofit LLCs, it does allow a Florida LLC to be formed for “any lawful purpose, regardless of whether the company is a for-profit company.”⁴¹

Florida Series LLCs

While the Florida Revised Limited Liability Company Act does not allow Florida LLCs to be formed as series LLCs, Florida law does recognize that series LLCs may be formed in other states. For example, the rules regarding Florida registration requirements allow the Florida Department of State to “require each individual series or cell of a foreign series limited liability company that transacts business in this state to make a separate application for certificate of authority, and to make such other filings as may be required for purposes of complying with the requirements of this chapter as if each such series or cell were a separate foreign limited liability company.”⁴²

What is a member of a Florida LLC?

The Florida Revised Limited Liability Company Act uses the term member to refer to an owner of an LLC.⁴³ If the LLC is a single-member LLC, the owner becomes a member at the time that the LLC is formed (as agreed upon with the person that forms the LLC).⁴⁴ Otherwise, the owners that agreed to form the company become members when the LLC is formed.⁴⁵

If the LLC is already formed, a person can become a member in one of several ways:

1. As provided in the operating agreement;
2. As a result of a merger, interest exchange, conversion, or domestication;
3. With the consent of all of the other members; or
4. In connection with the dissolution rules that apply to Florida LLCs.⁴⁶

Who makes decisions on behalf of a Florida LLC?

A Florida LLC may be governed by the members (member-managed), or LLC managers may be appointed to govern the day-to-day affairs of the LLC.⁴⁷ The Florida Revised Limited Liability Company Act uses the term manager to refer to the person that is responsible for managing a manager-managed LLC.⁴⁸ The LLC manager is responsible for decision-making on matters relating to the activities and affairs of the LLC.⁴⁹

How may LLC members and managers act on behalf of the LLC?

Florida LLC members and managers may act by formal meeting and vote, but that is relatively uncommon. In most cases, members and managers will sign an action without a meeting agreeing to actions on behalf of the LLC.

What is a Florida registered agent?

A Florida registered agent is a Florida resident or business organization that is designated to receive legal notices from the Division of Corporations on behalf of the LLC. Each Florida LLC must appoint a registered agent to receive service of process on the LLC. The registered agent must sign the articles of organization accepting the appointment before the organizer files the articles of organization.

What is a membership interest under the Florida Revised Limited Liability Company Act?

The Florida Revised Limited Liability Company Act uses the term membership interest to refer to a member’s economic interest in an LLC.⁵⁰ The Florida Revised Limited Liability Company Act recognizes both economic interest and non-economic interests in an LLC. It refers to an economic interest as transferable interest.⁵¹ It does not specifically define a non-economic interest.

What fiduciary duties apply to Florida LLC members and managers?

Fiduciary duties are an important—but often overlooked—aspect of LLC law. A fiduciary duty is a responsibility to act on behalf of another person and, where necessary, to put the other person’s interest ahead of one’s own.

It is not uncommon for LLC members and managers to be involved in different activities, some of which could be viewed as adverse to the interest of the LLC or other members or managers. Failure to consider fiduciary duties in the operating agreement can create unexpected liability for breach of fiduciary duty claims.

The Florida Revised Limited Liability Company Act imposes fiduciary duties on the members or—if the LLC manager-managed—the managers of each Florida LLC.⁵² These duties include a fiduciary duty of loyalty and a fiduciary duty of care. They apply to any action taken on behalf of the LLC.

Duty of Care

A Florida LLC member or manager’s duty of care in the conduct or winding up of the company’s activities and affairs is to “refrain from engaging in grossly negligent or reckless conduct, willful or intentional misconduct, or a knowing violation of law.”⁵³ Fiduciary duty provisions in the operating agreement should take the following into account:

• Uncabined duty of care. The duty of care is not limited to the duty of care defined in the Florida Revised Limited Liability Company Act. This means that, in interpreting the duty of care, courts may consider judicially developed fiduciary duties in a given dispute.
• Elimination of the duty of care. The Florida Revised Limited Liability Company Act does not allow the operating agreement to completely eliminate the duty of care.
• Modification of the duty of care. The Florida Revised Limited Liability Company Act allows the operating agreement to modify the duty of care.

Duty of Loyalty

Florida’s LLC fiduciary duty of loyalty includes three components. First, the member or manager must account to the LLC (and hold as a trustee for it) any property, profit, or benefit that the member or manager receives in the conduct or winding up of the LLCs activities and affairs, from the use of LLC property, or from taking advantage of an opportunity that would have benefitted the LLC.⁵⁴

Second, the member or manager must not act as—or on behalf of—anyone with an adverse interest to the LLC in the conduct of the LLC’s activities or affairs.⁵⁵  There is an exception for approved conflict-of-interest transactions. ⁵⁶

Third, the member or manager must also avoid competing with the LLC in the conduct of the LLC’s activities and affairs.⁵⁷  The non-competition prohibition ends when the LLC is dissolved.⁵⁸

Fiduciary duty provisions in the operating agreement should take the following into account:

• Uncabined duty of loyalty. The duty of loyalty is not limited to the duty of loyalty defined in the Florida Revised Limited Liability Company Act. When litigating a breach of the duty of loyalty, courts may consider fiduciary duties of loyalty that are derived from other sources, such as Florida case law.
• Elimination of the duty of loyalty. The Florida Revised Limited Liability Company Act does not allow the operating agreement to completely eliminate the duty of loyalty.
• Modification of the duty of loyalty. The Florida Revised Limited Liability Company Act allows the operating agreement to modify the duty of loyalty.
• Ratification of breach of duty of loyalty. The Florida Revised Limited Liability Company Act permit the operating agreement to allow all of the members of a member-managed LLC or managers of a manager-managed LLC to authorize or ratify, after full disclosure of all material facts, a specific act or transaction that otherwise would violate the duty of loyalty (ratify).
• Identifying activities that do not violate the duty of loyalty. The Florida Revised Limited Liability Company Act permit the operating agreement to identify specific types or categories of activities that do not violate the duty of loyalty.

Contractual Duty of Good Faith and Fair Dealing

Each manager of a manager-managed limited liability company and a member of a member-managed limited liability company must fulfill his or her duties and obligations—whether imposed by Florida law or by the operating agreement—consistently with the obligation of good faith and fair dealing.⁵⁹

May the operating agreement change fiduciary duties?

A Florida LLC operating agreement may not eliminate the duty of loyalty or the duty of care other than in the ways expressly permitted by the Florida Revised Limited Liability Company Act.⁶⁰  The Florida Revised Limited Liability Company Act permits the following modifications:

• The operating agreement may specify the method by which a specific act or transaction that would otherwise violate the duty of loyalty may be authorized or ratified by one or more disinterested and independent persons after full disclosure of all material facts.⁶¹
• If the operating agreement relieves a member of a responsibility and assigns to someone else, the operating agreement may eliminate or limit that member’s duty or obligation.⁶²
• An operating agreement may do any of the following, as long as the provision is not “manifestly unreasonable:”
  • Alter or eliminate the aspects of the duty of loyalty;
  • Identify specific types or categories of activities that do not violate the duty of loyalty;
  • Alter the duty of care (but not to authorize willful or intentional misconduct or a knowing violation of law); or
  • Alter or eliminate any other fiduciary duty.⁶³
• A Florida LLC operating agreement may not eliminate the obligation of good faith and fair dealing.⁶⁴  The operating agreement may prescribe the standards by which the performance of the obligation is to be measured, as long as the standards are not manifestly unreasonable.⁶⁵

A Florida operating agreement may not indemnify a member or manager for conduct involving bad faith, willful or intentional misconduct, or a knowing violation of law; a transaction from which the member or manager derived an improper personal benefit; a circumstance under which the liability provisions of Fla. Stat. § 605.0406 (liability for improper distributions) are applicable; or a breach of duties or obligations under Fla. Stat. § 605.04091 (fiduciary duties), taking into account a restriction, an expansion, or an elimination of such duties and obligations provided for in the operating agreement and permitted by Florida law.⁶⁶

How are Florida LLCs taxed?

The Florida Department of Revenue follows the federal income tax classification. Any Florida LLC (or foreign LLC qualified to do business in Florida) is treated identically for Florida purposes as they are for federal tax purposes.⁶⁷ See our discussion of LLC tax classification for more information about the ways that LLCs are treated for federal tax purposes.

Does Florida law permit LLC domestication or conversion?

Many states have statutory procedures for moving an LLC from one state to another. In Florida, this process is known as conversion. Florida law allows conversions into an out of Florida. As long as conversion (sometimes called LLC domestication) is allowed by the other state, an out-of-state LLC may convert to a Florida LLC, and a Florida LLC may convert to an out-of-state LLC.⁶⁸

What are the events of dissolution under the Florida Revised Limited Liability Company Act?

A Florida circuit court may dissolve a Florida LLC for any of the following reasons:

1. In a proceeding by the Department of Legal Affairs, if it is established that the LLC obtained its articles of organization through fraud or the LLC has continued to exceed or abuse the authority conferred upon it by law;
2. In a proceeding by a manager or member to dissolve the LLC, if it is established that the conduct of all or substantially all of the LLC’s activities and affairs is illegal;
3. In a proceeding by a manager or member to dissolve the LLC, if it is established that it is not reasonably practicable to carry on the LLC’s activities and affairs in conformity with the articles of organization and the operating agreement
4. In a proceeding by a manager or member to dissolve the LLC, if it is established that the managers or members in control of the LLC have acted, are acting, or are reasonably expected to act in a manner that is illegal or fraudulent;
5. In a proceeding by a manager or member to dissolve the LLC, if it is established that the LLC’s assets are being misappropriated or wasted, causing injury to the LLC, or in a proceeding by a member, causing injury to one or more of its members;
6. In a proceeding by a manager or member to dissolve the LLC, if it is established that the managers or the members of the LLC are deadlocked in the management of the LLC’s activities and affairs, the members are unable to break the deadlock, and irreparable injury to the LLC is threatened or being suffered; or
7. In a proceeding by the LLC to have its voluntary dissolution continued under court supervision.⁶⁹

The operating agreement cannot vary the grounds for judicial dissolution.⁷⁰. A deadlock resolution mechanism is not considered a variance for purposes of this rule.⁷¹ If the dissolution proceeding is due to a management deadlock, and if the operating agreement includes a deadlock sale provision, the deadlock sale provision applies to the resolution of the deadlock instead of the court order.⁷²

What are the grounds for dissociation under Florida LLC law?

A member is dissociated when any of the following events occur:

1. The LLC has notice of the person’s express will to withdraw as a member (but if the person specified a withdrawal date later than the date the LLC had notice, on that later date);
2. An event stated in the operating agreement as causing the person’s dissociation occurs;
3. The person’s entire interest in a single-member LLC is transferred to a judgment creditor in a foreclosure sale;⁷³
4. The person is expelled (See below);
5. The person dies or, if the person is not an individual (e.g., if the member is a corporation), the existence of the member terminates;
6. If the LLC is member-managed, a guardian or general conservator over the person is appointed or there is a judicial order that the person has otherwise become incapable of performing the individual’s duties as a member under this chapter or the operating agreement;
7. If the LLC is member-managed, the person becomes a debtor in bankruptcy, executes an assignment for the benefit of creditors, or Seeks, consents to, or acquiesces in the appointment of a trustee, receiver, or liquidator of the person or of all or substantially all the person’s property;
8. If the member is a trust, the trust’s entire transferable interest in the LLC is distributed;
9. If the member is an estate, the estate’s entire transferable interest in the LLC is distributed;
10. The LLC participates in a merger and is not the surviving entity or, otherwise as a result of the merger, the person ceases to be a member;
11. The LLC participates in an interest exchange and the person ceases to be a member;
12. The LLC participates in a conversion and the person ceases to be a member;
13. The LLC dissolves and completes winding up.⁷⁴

Is a dissociated member entitled to a distribution or redemption?

A person’s dissociation from a Florida LLC does not entitle the person to a buy-out.⁷⁵ Instead, the person’s interest is treated much the same as an assignee that has not been admitted as a member. Although the dissociated person may not participate in management, the person still holds an economic interest and is entitled to his or her proportionate share of distributions (and allocation of profit and loss) as they are made.⁷⁶

May an LLC member withdraw (voluntarily dissociate) from the LLC?

A Florida LLC member may voluntary dissociate (withdraw) at any time by notifying the LLC that the person wants to withdraw as a member.⁷⁷

May the LLC operating agreement prohibit withdrawal?

Although the operating agreement may prohibit withdrawal, the prohibition does not prevent the member from withdrawing. Instead, a withdrawal that breaches a prohibition in the operating agreement is considered a “wrongful” withdrawal.⁷⁸

What is a wrongful withdrawal under Florida LLC law?

A voluntary dissociation (withdrawal) that violates the operating agreement is a “wrongful” dissociation.⁷⁹ Wrongful dissociation includes any withdrawal that occurs before the LLC dissolves and winds up if:

• The dissociation is voluntary (“by express will”);
• The person is expelled by a court;
• The person is The person a member of a member-managed LLC and becomes a debtor in bankruptcy, executes an assignment for the benefit of creditors, or Seeks, consents to, or acquiesces in the appointment of a trustee, receiver, or liquidator of the person or of all or substantially all the person’s property; or
• If the person is not a trust (other than a business trust), an estate, or an individual, the person is expelled or otherwise dissociated as a member because it willfully dissolved or terminated.⁸⁰

A person who wrongfully dissociates as a member is liable to the LLC and to the other members for damages caused by the dissociation.⁸¹ The liability is in addition to each debt, obligation, or other liability of the member to the LLC or the other members.⁸²

Does Florida LLC law allow member expulsion?

Florida Revised Limited Liability Company Act provides three ways that a member may be involuntarily dissociated (expelled) from membership: expulsion pursuant to the operating agreement, expulsion by unanimous consent of the other members, and expulsion by judicial order.

Expulsion Pursuant to Operating Agreement

The operating agreement may provide for the expulsion of a member.⁸³

Expulsion by Unanimous Consent

The remaining members may expel a person from membership by unanimous consent if any of the following occur:

• It is illegal to carry on the LLC’s activities and affairs with the person as a member (for example, the LLC provides services that require the owners to hold licenses and the member loses his or her license);
• There has been a transfer of the person’s entire interest in the LLC other than a transfer for security purposes a charging order which has not been foreclosed;
• The person is a corporation that is being dissolved, revoked, or losing its right to do business in a jurisdiction and has not fixed the problem within 90 days after the LLC notifies the corporation that it will be expelled; or
• The person is an unincorporated entity (like an LLC or partnership) that has been dissolved and whose business is being wound up.⁸⁴

Expulsion by Court Order

A court may expel a person from membership if the person:

• Has engaged or is engaging in wrongful conduct that has affected adversely and materially, or will affect adversely and materially, the LLC’s activities and affairs;
• Has committed willfully or persistently, or is committing willfully or persistently, a material breach of the operating agreement or a duty or fiduciary duty; or
• Has engaged or is engaging in conduct relating to the LLC’s activities and affairs which makes it not reasonably practicable to carry on the activities and affairs with the person as a member.⁸⁵

Expulsion by court order should be a last resort. Courts are reluctant to take away a business owner’s rights in an LLC. The tentative language of the statute—“adversely and materially,” “willfully or persistently,” “material,” “not reasonably practical”—creates fertile ground for litigation. Cases in other jurisdictions have interpreted similar language as creating a “high bar” for expulsion by court order.⁸⁶

May the operating agreement modify or eliminate Florida’s default expulsion provisions?

Because the expulsion provisions of the Florida Revised Limited Liability Company Act are not on the list of provisions that cannot be waived by the LLC operating agreement, the operating agreement may eliminate or modify the ability of the members or, presumably, the court to expel a member.

What charging order protection applies to Florida LLCs?

If an LLC member loses a lawsuit, the successful plaintiff in the lawsuit (the judgment creditor) may ask the court to enter a charging order against the member.⁸⁷ The charging order acts as a lien against payment of the unsatisfied judgment with interest.

Charging orders are generally beneficial to LLC members. Instead of giving the judgment creditor the right to control the business, charging orders limit the judgment creditor to any funds that would otherwise be distributed to the defendant LLC member. Because the judgment creditor cannot force the LLC to make a distribution, the judgment creditor has limited remedies against the LLC member.

Many state charging order statutes limit a judgment creditor’s remedies to the charging order, thereby providing asset protection benefits to LLC members. Florida law generally provides broad charging order protection for multi-member LLCs, but diminishes that protection if the LLC has only one member. If the LLC is a single-member LLC, and if the judgment creditor can prove to the court that distributions under a charging order will not satisfy the judgment within a reasonable time, the court may order the sale of the member’s LLC interest pursuant to a foreclosure sale.⁸⁸

1. Fla. Stat. § 605.0102(58)(d).
2. Fla. Stat. § 605.0102(55)(e).
3. See Fla. Stat. § 605.0102(45) http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0600-0699/0605/Sections/0605.0102.html.
4. Fla. Stat. § 605.0105(1).
5. Fla. Stat. § 605.0105(2).
6. See Fla. Stat. § 605.0105(3).
7. See Fla. Stat. § 605.0109.
8. See Fla. Stat. § 605.0104.
9. See Fla. Stat. § 605.0204.
10. See Fla. Stat. § 605.04091.
11. See Fla. Stat. § 605.04091(4).
12. See Fla. Stat. § 605.0410.
13. See Fla. Stat. § 605.0702.
14. See Fla. Stat. § 605.0709.
15. See Fla. Stat. §§ 605.0801 – 605.0806.
16. See Fla. Stat. § 605.0804.
17. SeeFla. Stat. §§ 605.1023(1)(b), 605.1033(1)(b), and 605.1043(1)(b).
18. See Fla. Stat. §§ 605.1022, 605.1032, 605.1042, and 605.1052.
19. SeeFla. Stat. §§ 605.0106 and 605.0107.
20. See Fla. Stat. § 605.0408
21. See Fla. Stat. § 605.0406.
22. See Fla. Stat. § 605.04091
23. Fla. Stat. § 605.0105.
24. Fla. Stat. § 605.0105(4)(a). The normal rules also require the LLC to be able to pay any preferential distribution rights to members and transferees. See Fla. Stat. § 605.0405(1)(b).
25. Fla. Stat. § 605.0105(4)(b).
26. Fla. Stat. § 605.0105(4)(c).
27. Fla. Stat. § 605.0105(5).
28. Fla. Stat. § 605.0105(5)(a).
29. Fla. Stat. § 605.0105(5)(b).
30. See Fla. Stat. § 605.0102(19).
31. Fla. Stat. § 605.0102(25).
32. Fla. Stat. § 605.0102(44).
33. Fla. Stat. § 605.0902(1).
34. Fla. Stat. § 605.0902(1).
35. See Fla. Stat. § 605.0905(3).
36. See Fla. Stat. § 605.0905(1).
37. See Fla. Stat. § 621.051.
38. See Fla. Stat. § 605.0108(2).
39. See Fla. Stat. § 621.03(1). 
40. See Fla. Stat. § 621.03(3). 
41. See Fla. Stat. § 605.0108(2).
42. Fla. Stat. § 605.0902(3).
43. See Fla. Stat. § 605.0102(40).
44. Fla. Stat. § 605.0401(1).
45. Fla. Stat. § 605.0401(2).
46. Fla. Stat. § 605.0401(3).
47. Fla. Stat. § 605.0102(38).
48. See Fla. Stat. § 605.0102(38).
49. See Fla. Stat. § 605.0407(3) and 605.04073(2).
50. Fla. Stat. § 605.0102(29)(e).
51. Fla. Stat. § 605.0102(66).
52. Fla. Stat. § 605.04091(1).
53. Fla. Stat. § 605.04091(3).
54. Fla. Stat. § 605.04091(2)(a).
55. Fla. Stat. § 605.04091(2)(b).
56. Id. See Fla. Stat.§ 605.04092.
57. Fla. Stat. § 605.04091(2)(c).
58. Id.
59. Fla. Stat. § 605.04091(4).
60. Fla. Stat. § 605.0105(e).
61. Fla. Stat. § 605.0105(4)(a).
62. Fla. Stat. § 605.0105(4)(b).
63. Fla. Stat. § 605.0105(4)(c).
64. See Fla. Stat. § 605.04091(4).
65. Id.
66. Fla. Stat. § 605.0105(3)(p).
67. See TIP 98C1-05 (July 1, 1988).
68. Fla. Stat. § 605.1041(1) and (3).
69. Fla. Stat. § 605.0702(1).
70. Fla. Stat. § 605.0105(i).
71. Id.
72. Fla. Stat. § 605.0702(2).
73. See Fla. Stat. § 605.0503(5).
74. Fla. Stat. § 605.0602.
75. Fla. Stat. § 605.0404(2).
76. Fla. Stat. §§ 605.0603 and 605.0404.
77. Fla. Stat. §§ 605.0602(1) and 605.0601(1).
78. Fla. Stat. § 605.0601(2)(a).
79. Fla. Stat. § 605.0601(2)(b).
80. Fla. Stat. § 605.0601(2)(b).
81. Fla. Stat. § 605.0601(3).
82. Id.
83. Fla. Stat. § 605.0602(4).
84. Fla. Stat. § 605.0602(5).
85. Fla. Stat. § 605.0602(6).
86. See Gagne v. Gagne, 338 P.3d 1152 (Colo. App. 2014); IE Test, LLC v. Carroll, 140 A.3d 1268 (NJ Supreme Court 2016).
87. Fla. Stat. § 605.0503(1).
88. Fla. Stat. § 605.0503(4).