What is an LLC?

General Information:

The letters stand for Limited Liability Company, or “LLC”.

It is a type of business ownership combining several features of partnership and corporation structures.

It is not a partnership or a corporation.

The owners are called “members ”, not partners or shareholders.

For the purposes of the “Bank Concept” there are three types of owners:

The LLC Manager, or “Managing Member”
Preferred Member
Member

The number of members in an LLC are unlimited and may be individuals, corporations, or other LLCs.

The LLC is a separate entity created under, and governed by, the laws of the state jurisdiction in which it was formed. Initially, for the “Bank Concept”, this will be Colorado, or in the state in which most of the members reside.

It is chosen specifically to enjoy certain tax and personal liability protection that come with forming a corporation or LLC.

Advantages Limited Liability	Owners of a LLC have the liability protection of a corporation. An LLC exists as a separate entity much like a corporation. Members cannot be held personally liable for debts of and claims against the LLC unless they have signed a personal guarantee.
Flexible Profit Distribution	The LLC can select various forms of distributions of profit. LLCs have much more flexibility, unlike a common partnership where the split is 50-50.
No Minutes	The LLC business structure requires no corporate minutes or resolutions and is easier to operate. Corporations are required to keep formal minutes, have meetings, and record resolutions.
Flow Through Taxation	ALL LLC business *profits, losses, and expenses flow through* the company to the individual members . You avoid the double taxation of paying corporate tax and individual tax. Generally, this will be a tax advantage but some circumstances can favor a corporate tax structure. None of these are relevant to the “Bank Concept”
Contribution	A contribution of appreciated property to an LLC as a partnership is tax free regardless as to how much control the contributing partner has.
Liquidation	Liquidation of an LLC as a partnership is generally a tax free event.