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
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
concept to a for-profit business and still retain the educational aspect of the
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
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
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
that have a substantial expected source of revenue, as too much revenue
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
Michelin's of the world will need to believe in the concepts educational and
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
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.
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
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
normal business operations. This means all personal assets of the members of an
both tangible and monetary, are protected by tax law.
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
the member must pay tax even if no distribution is made during the year.
CLICK HERE FOR THE LLC AGREEMENT
President and CEO
Miniature World of Trains(TM) LLC