While it may sound mysterious and intriguing, an anonymous LLC (also called a private or confidential LLC) is just like a regular Limited Liability Company, except its members and managers are not publicly identified. The names, addresses, and contact information for members and managers remain private and it does not become part of the public record.
Not all states grant LLC owners anonymity. But depending on the circumstances, business owners in a state that prohibits anonymous LLCs may be able to form one in a state that does allow them.
Pros and Cons of Forming an Anonymous LLC
Why would you want to hide your ownership of an LLC? Here are some scenarios for registering a private LLC:
- Someone purchased real estate and wants to keep their transaction confidential.
- A business owner is a public figure or celebrity and wants to keep their new venture under wraps.
- An employee who has decided to start a side business may want to keep their identity hidden so that their current employer doesn’t prematurely catch wind that they plan to leave their position.
Sometimes, business owners simply prefer to form an LLC anonymously because they want to keep (as much as possible) their names and addresses out of Google and other search engines. There may be other reasons as well for wanting to remain anonymous.
Let’s take a moment to explore some of the potential benefits of registering a company as an anonymous LLC:
- It may help prevent malicious individuals from stalking or harassing LLC owners.
- It can help preserve LLC owners’ reputations if the business receives negative publicity.
- An anonymous LLC has the same tax and management flexibility and limited liability features as a regular LLC.
Along with the possible benefits of registering an anonymous LLC come some drawbacks:
- Anonymity is not guaranteed 100%. The state, bank, IRS, clients, partners, and vendors may be privy to the LLC owner’s private information. The privacy protections given to owners of anonymous LLCs vary from state to state.
- If the business is targeted in a lawsuit, the LLC’s ownership may be disclosed to various parties.
States That Allow Anonymous LLCs
Currently, the following states offer anonymous LLCs:
- Colorado
- Delaware
- New Mexico
- New York
- Nevada
- Ohio
- Wyoming
Other states require some degree of member or ownership info.
Which state is best for registering your private LLC? The answer is it depends on the circumstances.
Business owners must think about several factors before deciding where to register an anonymous Limited Liability Company. In some situations, they may need to structure their anonymous LLC in one state as the parent company of one or more entities in other states.
Here are some considerations for selecting a state of formation:
- Which anonymous LLC state provides the degree of privacy protection the owners would like to have?
- Which anonymous LLC state has the most favorable business laws and tax code?
- Will the LLC be set up for a company considered to be transacting business in one or more states? Examples would be selling products, providing services, renting or leasing property, or having W-2 employees. Or is it being formed to hold property without transacting business?
- In which state will the company transact business or base its operations?
- If transacting business in multiple states, from which one does it expect to generate most of its revenue or have most of its customers?
- Does the business owner live in an anonymous LLC state?
As you can imagine, many other factors come into play, so it’s important that business owners discuss their specific situation with a knowledgeable attorney and tax expert when deciding where to form their anonymous LLC and how to structure their business.
How to Set Up an Anonymous LLC
You may be wondering if there’s anything special you need to do to register an LLC that keeps members’ info confidential. For the most part, the steps for how to create an anonymous LLC are similar to forming a regular Limited Liability Company.
Here are the basic steps for forming an anonymous LLC:
- Select the state where you want to register your business.
- Decide on a business name and perform a name search to make sure another company providing similar products and services isn’t already using the name.
- Designate a registered agent to receive legal notices and government correspondence on your behalf.
- Register the LLC with the state by filing formation paperwork. This paperwork can be referred to as an Articles of Organization, Certificate of Organization, or Certificate of Formation. Some states do not require owners to provide their name and address information on their formation documents, thus keeping those details private. Some other states request ownership information but do not make those records available to the public.
- Obtain a Federal Tax ID Number (EIN) from the IRS. Note that the IRS will want to know the name and tax ID number (e.g., SSN, ITIN) of the responsible party requesting the EIN for the LLC.
- Set up a bank account for the business. Anonymous LLC owners should expect to provide their personal information and the business EIN to the bank when doing so. While the state may not require the owner’s personal identity details, financial institutions will want to know that information before they open an account.
Learn More About How to Keep LLC Ownership Private
If you’ve been wondering how to form an anonymous LLC, I encourage you to discuss your situation with an attorney so they can put you on the right path. And after you’ve determined your next steps, my team at CorpNet is here to assist you with all the filings related to setting up your business entity.
