What is an Anonymous LLC?
How does it work?
How is a private LLC different than a regular LLC?
In this article, we will break down the notion of Anonymous LLC so you know all there is to know about it!
Keep reading as we have gathered exactly the information that you need!
Let’s dig into our business structure know-how!
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What is Anonymous LLC
An anonymous LLC is a limited liability company where its members (or business owners) are not required to publicly disclose their identity with the state where the LLC has been formed.
In other words, the limited liability company business owner identity remains private.
This can be achieved when a business owner forms an LLC through a law firm that acts as the LLC organizer and registered agent and leverages the client-attorney privilege to protect the business owners’ identity.
Not all states in the U.S. allow for the identity of the business owners to remain confidential.
You can achieve a confidential LLC registration in Delaware, Nevada, New Mexico, and Wyoming.
In all other states, the name of the LLC members and managers will be publicly made available.
Once the company is formed, the business owner or member can continue protecting his or her personal information when contracting in the following manner:
- Sign name as “Authorized Representative” or “Member” instead of putting name and title of the LLC owner
- Sign NDAs to protect the business owner identity if the name disclosure is required for a personal guarantee, tax, or other legal purposes
- When signing forms or other legal applications, ensure that there are confidentiality clauses protecting the LLC member’s identity
- Consider including a liquidated damages clause in the event the confidentiality obligations are breached
How does it work
Typically, when you file LLC articles of organization with a state, you’ll need to disclose legally mandated information such as:
- Name of the officers
- Name of the directors
- LLC manager names
- Their address
However, when you form an LLC in Delaware, Nevada, New Mexico or Wyoming, you can form the LLC by providing the organizer’s information (that can be a law firm) or a nominee (or a temporary owner).
Once you form your company, you will no longer have to update that information once the organizer or nominee changes at a later point.
The LLC nominee’s name will appear as the contact name and contact information on the public records although the true LLC owner is not the same person.
Generally, once the LLC is formed, the organizer or nominee resigns and the true business owner gets appointed.
Best state for anonymous LLC
Which states are the best states for registering an anonymous LLC?
Here is a list of the states where you can form an LLC and maintain the privacy of its members:
- New Mexico
Since there are only a few states offering LLC privacy, to form a business in this way, you’ll need to choose one of the four states offering such a possibility.
Let’s look at each of these states in further detail.
Anonymous LLC Delaware
Here are the reasons why a Delaware LLC can be a good choice to preserve the founder’s anonymity and the Delaware LLC privacy:
- Delaware’s Court of Chancery is specialized in business and has a deep understanding of business matters
- The state laws offering interesting legal protection to LLC owners
- No corporate tax will be required to be paid to the state
- The identity of the LLC members or LLC managers are not required to be disclosed
In Delaware, you’ll need to name a registered agent and pay a yearly franchise fee.
Anonymous LLC Nevada
Nevada is a good option to form a private LLC.
Nevada offers advantageous laws allowing LLCs to operate in a flexible way.
In addition to that, Nevada offers a “nominee service” which means that the LLC owner’s name can be replaced with that of a nominee on the public registry.
This offers a layer of privacy that may be interesting for some.
Anonymous LLC New Mexico
Here are a few reasons why New Mexico invisible LLC can be a great option:
- The filing fees are not expensive in New Mexico
- You don’t have to pay for annual reports
You’ll need to appoint a third-party registered agent and will need to file a corporate income tax in New Mexico.
Anonymous LLC Wyoming
You may want to register an anonymous LLC in Wyoming offering interesting tax advantages.
In essence, an LLC will not need to pay corporate income tax to the state.
On the flip side, your LLC will need to pay an annual fee when filing its annual report.
In this state, you can have a nominee service just like in Nevada.
Having a Wyoming LLC privacy may compel some to register their LLC in this state.
Anonymous LLC California
Many think that California permits the formation of an anonymous LLC.
However, you cannot do that as you must file a Statement of Information requiring you to disclose the name of the managers of your LLC.
As a result, for those wondering if they can register a private LLC in California, the answer is negative!
Advantages of Anonymous LLC
What are the benefits of registering an LLC where the identity of its owners is kept confidential?
One of the most notable advantages of forming a confidential LLC is to protect the identity of the business owner from potentially dangerous people.
For example, a famous person or one with notoriety may have stalkers or have criminals looking for them and trying to find them.
By registering a private LLC, the business owner can keep his or her personal information and identity confidential to avoid stalkers and criminals from misusing that information or engaging in harassment.
Another important reason why an anonymous LLC can be interesting is that should the business fail, the downfall of the business could not be traced to the actual LLC owner.
In a nutshell, here are the benefits you can extract from a limited liability company anonymous:
- Limited liability protection
- LLC tax advantages
- LLC flexibility
- Survivability and business continuity
- Attorney-client privilege can be asserted when a law firm is disclosed as a registered agent
- Attorney-client confidentiality can render the company certain communications immune to discovery
- Privacy protection as the owner is not disclosed
- Harassment prevention as the members of the LLC are not publicly known
Disadvantages of Anonymous LLC
What are the drawbacks of doing business under an anonymous LLC structure?
It’s important to keep in mind that doing business fundamentally requires that you deal with clients, suppliers, vendors, employees, partners, banks, IRS, government, or other stakeholders.
Although the overall objective is to remain fully anonymous, it’s difficult to guarantee that the member’s identity will definitively and permanently remain private.
Another disadvantage is that the third-party registered agent or law firm will be required to legally act for the LLC owners if they receive a subpoena.
Furthermore, in applying for an Employer Identification Number (EIN) with the IRS or opening a business bank account, the LLC members’ identity must be disclosed.
The IRS or the bank needs to link the EIN number or bank authorized signatory to a specific person.
In this context, the LLC anonymity may be lost.
Standard LLC vs Anonymous LLC
What is the difference between a regular LLC and an anonymous one?
From a purely legal perspective, there are no differences between registering a private LLC versus a regular LLC.
A limited liability company is a flexible company type allowing the business owners to take advantage of tax benefits and a simpler formation process than corporations.
Just like regular LLCs, an anonymous limited liability company will enjoy the same benefits as a regular limited liability company.
Such benefits can include aspects like:
- Tax advantages
- Limited liability protection
- Pass-through taxation
Just like a standard LLC, an LLC anonymous must apply for an Employer Identification Number (EIN) by filing an EIN application with the IRS.
Typically, that’s a prerequisite to opening a bank account for the LLC.
So what does an Anonymous LLC entail?
Let’s look at a summary of our findings.
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