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Push-Back from Customers for LLC Requirements

Question: 
There is some ambiguity regarding LLCs at our institution. We require LLCs to have a TIN, and will allow a SSN for sole member LLCs. We also ask that LLCs register with the VT SOS and provide us with an operating agreement. The pushback we get from customers and sometimes their attorneys is problematic. Are we out of line in our requirements?
Answer: 

Answer by Jim Bedsole:

Just wait until Beneficial Ownership rules come into place in 2018. I don't think you are out of line. If Vermont does not require LLC's to have an operating agreement, you may need to make some accommodation on that front. But otherwise, your requests seem reasonable from a CDD standpoint.

Answer: 

Answer by Ken Golliher:

The law requires you to get a TIN prior to opening an account. The LLC simply doesn't exist if it has not registered with the state; i.e. evidence of registration is the only possible proof of its identity. These two points will not support an intelligent debate.

As suggested, if the state does not require an operating agreement then you need to have a thoughtful reason as to why your bank does. An LLC can set up an operating agreement where it assigns authority on a variety of matters or it can do it one resolution at a time. Being the owner of an LLC, I would not be interested in hearing the bank's opinion about how we should do it.

First published on 10/22/2017

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