Obviously, the major difference with a single-member LLC is that there is only one member. But this distinction has created a serious consequence for Florida business owners.
The primary protection offered by the LLC entity structure is that it provides limited liability protection for members. In other words, the entity shields members from creditors in various ways.
For example, if a member of a Florida LLC is sued and a creditor seeks payment for debts, the assets of the LLC cannot be seized in order to pay for the debt (because these assets belong, in part, to other members). As well, should the LLC itself be sued, a creditor cannot seize the houses of LLC members as a means of paying the debt.
In these cases, creditors are generally held to using what are called charging orders to remedy debt collection. A charging order limits the means by which debt can be collected.
Unfortunately, a 2010 Florida Supreme Court case (Olmstead v. Federal Trade Commission) found that the charging order limitation did not apply to single-member LLCs in Florida.
This means that any Florida single-member LLC is not treated by the court system like other LLCs, but instead like a sole proprietorship.
In a worst-case scenario, a creditor seeking repayment from a single-member LLC in Florida could seize control of the company, redirect distributions and liquidate assets until the debt is paid.