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Christmas Model Train Display


 

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The Miniature World of Trains(TM) is a LLC with great potential that was a proven concept as a
non profit with close to 40,000 visitors from July 2014 to July 2015 with virtually no advertising
and limited parking in downtown Greenville, SC.

The reason the non profit does not exist simply stated was that lack of funding.

So it has been decided to create the concept under an LLC.

The Miniature World of Trains(TM) is a great concept but has been very hard to fund as a non profit.
Staffing the concept being one of the major issues. Volunteers have no real 'skin in the game'.

Starting a nonprofit meant diving into a fiercely competitive market that's
getting fiercer. Intimidating? Yes. The cold, hard truth? You bet, the non profit donations for the
concept was not well received by corporations and foundations. It was a hard sell most big donors
just did not get what the non profit was trying to accomplish. We have seen this fight for funding
and a location over the last 6 years at frankly, it was a dead end.

The solution for the Miniature World of Trains(TM) is to allow the concept to diversify the revenue sources
by creating a for profit LLC. The plan is to change the Miniature World of Trains(TM)
concept to a for-profit business and still retain the educational aspect of the concept.

The for-profit company will have private investors (members).

The investors of the Miniature World of Trains(TM), or its equity, can be divided and allocated
among different individuals based upon there amount of their investment. For this reason, one advantage
of a for-profit LLC company is that it could allow the concept to bring in investors (members)
ranging from friends and family to angel investors and venture capitalists, visitors and volunteers of
the concept from the past. While some investors (members) are quite
unfamiliar with this new entity type and will have questions about the exposure to risk due to
the company's social obligation, there are impact investors who are drawn to triple-bottom-line
businesses because of their emphasis on the social impact.

The LLC has no Limits on Revenue Generation. Unlike a nonprofit, there is no limit
on a for-profit company's ability to generate revenue
through providing goods and services. This may be an important factor for enterprises
 that have a substantial expected source of revenue, as too much revenue can actually
jeopardize a non profits status.

Non profit donors are able to donate to a non profit but with the LLC they can donate without becoming

a member of the LLC but will not be able to receive a tax deduction. All donations
will go to funding the educational aspect of the overall concept. The for profit LLC cannot offer tax
deduction to investors (members). While some individuals can and may donate regardless of the
tax deduction and not be investors (members), this effectively eliminates large donors since they
almost always require a tax deduction as a condition for donation. So the BMW's and
Michelin's of the world will need to believe in the concepts educational and community
significance and donate without a tax deduction. For example money is needed for rent space from
the for profit LLC to hold training classes or give money to the for profit LLC to help create and pay for
educational displays and activities that the for profit LLC will use.

The for profit LLC will generate revenue initally from members and donors will create the displays
to be housed inside the new for profit LLC location. The for profit LLC will create the displays,
class rooms etc that the hold S.T.E.A.M. (Science, Technology, Engineering and Math)

Programs can be used to further their corporate mantra.

The for-profit LLC will be able to take on investors (members), so there's more access to more sources of funding.
As long as the revenue generating activities are carried out under the for-profit LLC ,
 there is also no limit on generating revenue.

Initial funding will need to be no less than $250,000 in cash before a lease can be committed to.

Without this cash it is very difficult to secure a location for the concept as we have seen
over the last 6 years of the non profit. The for profit LLC will secure the space without any personal guarantees.

Click Here for the overall funding plan spreadsheet.

The initial funding will be held in escrow until it is needed to secure and lease and create
the concept in a minimum 15,000sf venue.

Can An LLC Issue Stock?

A limited liability company, or LLC, cannot issue stock. Instead, an LLC is
structured to have single or multiple owners of that entity, who are referred to as members.

Members can be added and subtracted over the life of the LLC, and profits are able to be
distributed by varying amounts to each of the members.

Members are bound as owners by a signed partnership agreement instead of through stock
issuance or option grants. Since no stock is issued to the members of an LLC, the entity is taxed as a
pass-through entity. Each member of the LLC reports his share of the entity's profits on his personal
income statement in the form of income, but the corporate entity itself incurs no taxes. This is unlike
a C corporation or S corporation that issue stock, where members are double taxed. Profits from these
types of corporations are taxed at the corporate level, and then any after-tax profits are distributed
to shareholders and taxed as capital gains on their personal tax returns.

A lot of the same liability benefits of a C corporation or S corporation can be realized
with an LLC. Each member of an LLC is protected against any debt taken on by the
corporate entity and is protected against any potential lawsuits that may arise during
normal business operations. This means all personal assets of the members of an LLC,

both tangible and monetary, are protected by tax law.

Member Interest Rights?

Members of the LLC each have a membership interest in the business that entitles
them to a pro rata share of earnings and assets, and the right to actively participate
in the management of the business. However, unlike corporate stock, you cannot transfer
all membership rights to a third party. A non-member may purchase a member's financial
interest in the LLC, but does not receive any right to participate in firm business. The
financial interest entitles the buyer to the same share of LLC profits and assets as the
member has. This barrier to management provides assurances to current members
that minimal disruption to LLC operations will occur from frequent ownership changes.

However, most jurisdictions allow LLC members to draft an operating agreement that
allows for the transfer of management rights.

Distributions

The members of an LLC and the shareholders of a corporation both have a claim
on the assets and earnings of the business. Shareholders of common stock may receive dividend
payments from after-tax earnings at the discretion of the corporation's board of directors.

In contrast, LLC members may receive periodic profit distributions from the company.

Although most jurisdictions do not require the LLC to distribute profits, if an operating
agreement provides for a non-discretionary payment, a member has a legal claim to that distribution.

Taxation

A corporate entity is solely responsible for reporting taxable earnings and the
payment of federal income taxes, while shareholders have no obligation to
report any business earnings. The shareholder however must pay personal
income tax on dividends they receive during the year. In contrast, an LLC that
has more than one member is treated as a partnership solely for tax purposes.

Partnership taxation imposes the obligation to report and pay tax on business
earnings on individual members. Each member must include on a tax return his
pro rata share of LLC taxable earnings and pay the appropriate tax. Unlike a shareholder,
the member must pay tax even if no distribution is made during the year.

CLICK HERE FOR THE LLC AGREEMENT

Frank Ruby
President and CEO
Miniature World of Trains(TM) LLC
02/19/17

Disclaimers

copyright Miniature World of Trains LLC 2009-2017