How to Allocate Shares in a Private Limited Company in Florida

Normally, the process of distribution of membership interest in a limited liability company (LLC) occurs before its registration. Thus, each member’s share of ownership can be part of the provisions within an operating agreement.

In this article, you will discover how to allocate shares in a private limited company in Florida.

Private Limited Companies in Florida – Understanding LLC Businesses

A limited liability company (LLC) is similar to a corporation, as it grants owners (members) limited personal liability regarding the business’ debt and liabilities.

However, unlike corporations, LLCs do not need to have regular stockholder meetings or management meetings. Also, there are no requirements to comply with other corporate formalities.

Other than structural flexibility, LLC owners enjoy federal “pass-through” status, meaning they do not pay corporate taxes and are not exposed to double taxation. Instead, any business-related taxes pass through the entity to its owners’ personal tax returns.

Despite the number of advantages, creating an LLC requires owners to file the Articles of Organization to the Secretary of State, as well as appointing a registered agent for service processing.

Although most corporate resolutions do not apply to LLCs, the ideal approach is to keep a record of the company’s activities, as well as holding regular meetings between LLC members.

Is It Possible to Issue LLC Shares in Florida? – An Overview

When registering an LLC with the Secretary of State, members in a private limited company need to identify themselves publicly on the Articles of Organization document. Thus, LLCs are not like corporations, which issue shares after official registration.

In Florida, LLCs must settle all questions concerning ownership before the company is officially registered (although it is possible to change the list of LLC members later by using amendments).

Hence, distributing ownership interest in an LLC is quite different from the corporate process of stock issuance.

In most cases, the members participating in an LLC structure are acquaintances who formally agree to form a private limited company, which does not require any public issuance of stocks to get funding.

As limited liability companies do not have the same formalities as corporate businesses, LLCs vary in terms of business structuring and management. For example, some LLCs issue owners with membership certificates, while others do not. Some LLCs do not even have an operating agreement in place, as it is not formally required. Still, the best approach for Florida LLC owners is to sit down and formalize all details regarding ownership in a written operating agreement.

Ownership shares in a Private Limited Company in Florida – Understanding Membership in an LLC

Members Do Not Necessarily Have Equal Ownership

While many LLC members have equal rights, it is not mandatory by law. Therefore, LLC members can waive equal ownership as long as they specify it using a written operating agreement.

In Florida, different LLCs have very different structures, such as voting and non-voting members, or members with more control than others.

Transferring Ownership of an LLC

In Florida, it is possible to transfer membership interest of an LLC from person to person. Usually, all the members must consent before a member sells his interest, but the process varies according to each business’s operating agreement.

This way, it is possible to maintain a limited liability company everlasting and survive unexpected events like the death of a shareholder, for example.

Unmatched Flexibility

Because limited liability companies have flexibility when it comes to profit distribution, members can choose how they will distribute the business’s profits. Hence, as long as it is provided in the LLC’s operation agreement, distribution is not necessarily based on the ownership stake of an LLC member.

The ownership interest of an LLC member is not necessarily associated with monetary contributions. Hence, if a member in an LLC has not contributed cash, he/she can still have an ownership stake in the company if the operating agreement says so.

Florida law also grants LLCs a huge level of flexibility during the disposal of assets in case of dissolution. While corporate businesses calculate asset distribution based on the number of shares per owner, LLCs can rely on alternative ways to distribute assets during dissolution.