A Florida LLC manager-managed operating agreement is the internal contract that separates ownership from control: it designates the company as manager-managed, names who runs it, defines what that person can do without asking the members, and preserves the rights the members keep for themselves. The designation itself is the starting point. Florida’s Revised Limited Liability Company Act treats every LLC as member-managed by default, so unless the operating agreement or articles of organization expressly state that the company “is or will be manager-managed,” that management “is or will be vested in managers,” or use similar language, every member has equal authority to bind the company.1Online Sunshine. Florida Code 605.0407 – Management of Limited Liability Company
The agency consequence is the whole point. In a member-managed LLC, any member can sign contracts and bind the company. In a manager-managed LLC, only the designated managers can, and a member’s status alone does not make them an agent of the company.2Online Sunshine. Florida Code 605.04074 – Right of Members, Managers, and Officers To Bind Limited Liability Company That is why passive investors, outside professional managers, and families that want one person running the business all gravitate to this structure. The declaration can appear in the articles of organization, but it is optional there; the operating agreement is where the detailed terms belong.3Online Sunshine. Florida Code 605.0201 – Formation of Limited Liability Company; Articles of Organization State the designation plainly. Vague language invites a court to apply the member-managed default.
Choosing, Paying, and Replacing the Manager
Florida’s default rule is simple. A manager can be chosen at any time by members holding more than 50 percent of the company’s current profit interests, the manager need not be a member, and the manager serves until a successor is chosen or until resignation, removal, or death. Removal uses the same majority-of-profit-interests threshold, at any time, without notice, and without cause.4Florida Senate. Florida Code 605.04072 – Selection and Terms of Managers in a Manager-Managed Limited Liability Company
Those are defaults, and most operating agreements modify them. Common changes include supermajority removal thresholds (two-thirds or three-quarters of profit interests) to protect a manager who is also a minority owner, cause-only removal restricted to grounds like fraud, gross negligence, or material breach, and fixed terms with renewal by member vote rather than indefinite service.
Compensation is a separate drafting decision. Specify whether the manager receives a salary, a share of profits, expense reimbursements, or some combination. Leaving it vague produces a predictable fight later.
Succession
Most agreements name the initial manager and say nothing about what happens if that person becomes incapacitated, dies, or walks away. That gap can paralyze the company. Name an interim decision-maker who can keep operations running (a backup manager, a key employee, or someone acting under a power of attorney), define what triggers the succession process, and set a deadline for the member vote so the company is not left in limbo.
What the Manager Can Decide Alone and What Needs a Member Vote
Every manager acts as an agent of the company for its ordinary activities. A manager’s signature on a contract, hire, or transaction that appears to be in the ordinary course of business binds the LLC, unless the other party knew the manager lacked authority for that particular deal. An act outside the ordinary course only binds the company if the members authorized it.2Online Sunshine. Florida Code 605.04074 – Right of Members, Managers, and Officers To Bind Limited Liability Company
A well-drafted agreement goes further and lists actions that require member approval regardless of how “ordinary” they might look from the outside. Typical reserved matters:
- Selling all or substantially all of the company’s assets, or acquiring assets above a specified dollar amount.
- Taking on loans or guarantees above a defined threshold.
- Merging with another entity, converting the LLC to a different form, or admitting new members.
- Amending the operating agreement.
- Filing for bankruptcy or voluntarily dissolving the company.
Dollar caps are what make this workable. If the agreement says the manager can commit the company to any expenditure under $50,000 without a vote, everyone knows the line. Without a number, disputes about what counts as “ordinary” are inevitable.
Indemnification
Most operating agreements include an indemnification clause requiring the LLC to cover the manager’s legal defense costs, settlements, and judgments arising from actions taken on behalf of the company, as long as the manager acted in good faith and within the scope of their authority. The clause should carve out fraud, willful misconduct, and acts outside the manager’s authorized role. Without this protection, qualified people have little reason to take the job.
Fiduciary Duties the Agreement Cannot Erase
Florida law imposes two core fiduciary duties on every manager of a manager-managed LLC: the duty of loyalty and the duty of care. These exist by statute and apply even if the agreement is silent.5Online Sunshine. Florida Code 605.04091 – Duties of Members and Managers
The duty of loyalty requires the manager to account to the LLC for any profit or benefit derived from using company property or from taking a business opportunity that belonged to the company, bars the manager from dealing with the company on behalf of someone whose interests conflict with the LLC’s, and prohibits competing with the company before dissolution.5Online Sunshine. Florida Code 605.04091 – Duties of Members and Managers This is the duty most often litigated. A manager who steers a profitable deal to a side business, or quietly leases property they personally own to the LLC, has a loyalty problem.
The duty of care obligates the manager to avoid grossly negligent or reckless conduct, willful or intentional misconduct, and knowing violations of law. Ordinary business mistakes do not breach it. A bad investment made after reasonable research is not a breach; signing a major contract without reading it probably is.
The operating agreement can modify the scope of these duties within statutory limits, but cannot eliminate them. If the members want to let the manager pursue outside interests that might overlap with the LLC, say so explicitly rather than relying on a general waiver.
Rights Members Keep
Delegating control does not turn members into bystanders, and several of their rights exist under Florida law regardless of what the agreement says.
Voting
Members retain the right to appoint and remove the manager at the statutory threshold, and the agreement can expand the list of matters that require a member vote. The reserved items above (asset sales, major debt, structural changes, amendment) belong to the members, not the manager.
Information Access
Members have the right to access the company’s books, records, and financial information under Florida’s Revised LLC Act. This is how passive members monitor the manager and verify that company funds are being handled properly. The agreement typically specifies the mechanics of a records request (format, timing, who pays reproduction costs). Trying to restrict this right too aggressively risks running into statutory protections that cannot be waived.
Transfer Restrictions
Florida law allows the transfer of a member’s economic interest (the right to receive distributions) without dissolving the company, but the transferee does not get management rights, records access, voting rights, or membership. A transfer that violates a restriction in the operating agreement is ineffective against anyone who knew about the restriction.6Florida House of Representatives. Florida Code 605.0502 – Transfer of Transferable Interest Most agreements add a right of first refusal: before a member can sell their interest to an outsider, the LLC or the remaining members get the first chance to buy at the same price.
Capital Contributions, Allocations, and Distributions
Florida allows contributions in cash, tangible or intangible property, services already performed, promissory notes, and contracts for future services. The agreement should state each member’s initial contribution and its agreed value. A promise to contribute must be in writing to be enforceable, and that obligation survives the member’s disability or death.7Florida Senate. Florida Code 605.0403 – Liability for Contributions
Future capital calls deserve attention. Specify whether members are obligated to put in more money beyond their initial investment and under what circumstances. Spell out the consequences of a default. Florida law allows the agreement to impose penalties on a non-contributing member, including reducing or eliminating their ownership percentage, subordinating their interest to non-defaulting members, or forcing a sale of their interest.7Florida Senate. Florida Code 605.0403 – Liability for Contributions
Allocations and distributions are two different things, and confusing them is one of the most common drafting mistakes. Allocations divide the company’s taxable income and losses among members for their individual tax returns. Distributions determine when actual cash leaves the company. Allocations often track ownership percentages but need not; the IRS requires that allocations have substantial economic effect, meaning they reflect a genuine economic arrangement rather than a tax-shifting scheme. Capital accounts record each member’s economic position, and the agreement should require proper maintenance of them.
Distributions are a separate decision. State whether they are mandatory on a set schedule or discretionary with the manager. Even when discretionary, the agreement should require at least a tax distribution large enough to cover each member’s tax liability from the LLC’s allocated income. Without that provision, a member can owe tax on income they never received.
Federal Tax Classification
Legal structure and tax treatment are separate choices. By default, the IRS classifies a multi-member LLC as a partnership and a single-member LLC as a disregarded entity.8Internal Revenue Service. Limited Liability Company (LLC) The LLC can elect different treatment by filing Form 8832 to be taxed as a corporation,9Internal Revenue Service. About Form 8832, Entity Classification Election and can file Form 2553 to elect S-corporation status, which can reduce self-employment taxes for members who actively work in the business. S-corp eligibility is limited: no more than 100 shareholders, only one class of stock, and only eligible shareholders (individuals, certain trusts, and estates, not partnerships or corporations).10Internal Revenue Service. S Corporations
Address the intended tax classification in the operating agreement and require member consent before anyone files an election to change it. A switch from partnership to S-corp taxation affects every member’s return and can change how distributions work. That decision should never sit with the manager alone.
Dissolution and Winding Up
The agreement should define what triggers dissolution and who runs the process. Common triggers include a unanimous or supermajority member vote, expiration of a fixed term, or a specific event the members agreed would end the company.
Florida law also allows judicial dissolution when internal mechanisms fail: unlawful activities, operations no longer reasonably practical under the agreement, illegal or fraudulent conduct by managers or controlling members, waste of company assets, or management deadlock causing irreparable harm.11Florida Senate. Florida Code 605.0702 – Grounds for Judicial Dissolution
After dissolution, the company must wind up before it ceases to exist. Winding up involves collecting debts owed to the company, liquidating assets, notifying creditors and satisfying their claims, filing final tax returns, canceling permits and registrations, and distributing any remainder to the members according to their capital accounts. The agreement should say whether the manager handles winding up or whether the members appoint someone else. In a judicial dissolution, the court can appoint a receiver.12Florida Senate. Florida Code 605.0704 – Receivership or Custodianship If the LLC is registered to do business in other states, withdraw those foreign qualifications as part of winding up, or the annual report fees and tax obligations will keep accruing in states where the company no longer operates.