An LLC’s members (owners) can be individuals, or other business entities such as other LLC’s or corporations. A member of an LLC can own between 1 to 100 percent of the company. In Florida, an LLC can be a single member LLC where there is only one member, or a multi-member LLC comprised of multiple members. Additionally, there is no residence requirement nor age requirement for the members of an LLC in the state of Florida.
A minor can own an LLC individually or with an adult. There is nothing in the new Florida Revised Limited Liability Company Act that restricts a minor from being a member of an LLC. Although an LLC can be owned solely by a minor, problems can arise where it would benefit the minor to have an adult as another member of the LLC. The problems that can arise if the LLC is solely owned by a minor are due to the legal rules that govern contracts asserted by minors. In Florida, a minor can enter a contract, however, that contract is voidable. Voidable means that the minor can avoid any of the contract’s obligations without any repercussions, while the other non-minor party does not have that option.
The legal rules governing minors asserting a contract can make it very risky for the other non-minor party. Due to these legal rules for minors, other businesses or individuals may be hesitant to enter into an agreement with an LLC that is solely owned by a minor, because the contract will not be legally binding. Having an adult as a member along with a minor is not only allowed but would avoid any problems involved in making agreements with other individuals or companies.
How to avoid the contractual issues with having a minor as a member of LLC?
If an adult parent, adult sibling, or adult friend is a member of the LLC with the minor, the members over the age of 18 should sign all contract on behalf of the LLC. Additionally, the LLC can file a statement of authority with the Secretary of State specifying that only adult members serve as the LLC’s agents with the authority to legally bind the company to contracts.
Another alternative is to establish a manager-management business structure for the LLC, rather than the default member-managed structure. The manager-management structure means that the LLC business is run by one or more designated managers. The managers can be LLC members, nonmembers, or both. Under this structure, the managers would be the adult(s) and the minor-members would be the passive investors that are not involved in the LLC’s day to day business operations. Although, the default structure for LLC’s is member-management, it can be changed and the structure must be established in the LLC’s articles of organization or a written operating agreement.