An anonymous LLC is a structure of LLCs where the owners/members of the LLC are not required to disclose their identity to the state where the LLC has been formed. However, not every state in the USA allows the formation of an anonymous LLC. The four states that will enable an anonymous LLC are Nevada, New Mexico, Delaware, and Wyoming.
HOW DOES IT WORK?
In the states where the anonymous LLCs are allowed, the members/owners of an LLC can continue to practice their anonymity after the formation of their LLC in the following manner:
- By including a clause of liquidated damages in a case, confidentiality obligations are breached.
- By signing forms and other legal documents to ensure confidentiality.
- By signing the documents as ‘member’ or ‘authorized representative’ of the LLC, instead of writing the name.
- When the name is required, members should follow it up with an NDA to make sure that it isn’t disclosed to anyone else.
WHY SHOULD YOU HAVE AN ANONYMOUS LLC?
To begin with, an LLC itself has a lot to offer as compared to other business structures. On top of that, certain advantages are specific to an anonymous LLC. Following are some of the primary reasons to opt for an anonymous limited liability company:
- ENJOY LLC BENEFITS
Before anything else, an anonymous LLC is an LLC, and that has its benefits. It gives you limited liability protection if your business goes down, and it comes with a variety of tax advantages. Furthermore, an LLC structure offers much flexibility in management, adding and removing members, etc.
Another advantage of LLC that is not talked about enough is survivability. Should you incapacitate or die, an LLC is the most cost-effective way to ensure your business survives for your estate or your family.
- ATTORNEY/CLIENT PRIVILEGE
It is an advantage that is specific to anonymous LLC. It is a very effective tool for very minimal disclosure in legal settings. Your attorney will represent you wherever it is needed, and your name or the name of your fellow members will not be disclosed in deals.
- HARASSMENT PROTECTION
Since there is no disclosure of the identities of the members of an LLC, they can avoid a variety of harassment due to the kind of business they are operating and other issues involving the company.
Now that we have taken a look at the advantages that an anonymous LLC has to offer, we will discuss its drawbacks and how can it prevent you from doing business at times:
DISADVANTAGES OF AN ANONYMOUS LLC
One of the fundamental requirements of a business, either a corporation or an LLC, is to deal with various stakeholders, I.e., government, IRS, banks, vendors, partners, employees, clients, etc. In this quest, the purpose of an anonymous LLC is often lost, which is to keep the member/owner of an LLC secret. So, an anonymous LLC will not allow you to deal with many stakeholders directly, and it can have potential drawbacks.
Furthermore, if your LLC is facing a lawsuit, it will not represent itself directly, and a third-party attorney or firm will represent the LLC. While it is not a significant disadvantage, you can often argue that you can represent your LLC better than a third party as you understand your business better.
- WHAT ELSE ANONYMOUS LLC CAN’T PROTECT?
When you are filing for your LLC, the majority of the states require you to disclose the members’ and managers’ identities, except for the states mentioned above. Even in the states where there is no anonymity, you can still use your registered agent as your business organizer and keep your name confidential to an extent.
However, this type of anonymity will not be absolute, and even the anonymity in the states where anonymity is allowed is not absolute. If your LLC fails to pay taxes or breaches other terms defined by the IRS, your bank and IRS have all the information about you, and they can use it against you. IRS receives your detailed information when you apply for EIN for your LLC.
Furthermore, having an anonymous LLC will not prevent you from paying taxes and other fees as required by IRS. You will also not be immune to lawsuits against your LLC, and in those lawsuits, attorneys can use the subpoena power of the courts to identify the members and managers of an LLC.
IS IT THE FUTURE OF LLCs?
It can be said so. With the rise in the landscape of technical business, there is a growing demand for privacy, and nothing does it better than operating the business under an anonymous LLC. But it is not only the information technology businesses that can benefit from anonymity, and history tells us that every big company took great advantage of anonymity throughout the years.
For example, going back into 1960, when Walt Disney decided to grow, it formed multiple corporations under different names, and the extensive swamps of business lands in Florida, where Disney sits today, were bought under different corporations’ names. An anonymous LLC is not a corporation, but it’d have opted for an anonymous LLC if Disney had to do the same thing today.
Almost every privacy that businesses looked for in the past has been offered under one umbrella of an anonymous LLC. If your business requires you to prioritize your privacy, there is no better option for you than to opt for an anonymous LLC.
Frequently Asked Questions
This section looks at some of the frequently asked questions on the topic of anonymous LLCs:
- HOW DO I MAKE MY LLC ANONYMOUS?
To form an anonymous LLC, you will have to select a state that offers anonymous LLC services. Articles of organization in those states will not require you to disclose your or your managers’ identities, and hence you will be able to work anonymously. However, there is no absolute anonymity in any case, and agencies like IRS would still have all your information.
- WHAT STATES ALLOW ANONYMOUS LLCS?
Only Nevada, Delaware, Wyoming, and New Mexico allow you to register anonymous LLCs. In all other states in the USA, you will not be able to keep your identity secret. Delaware is often considered the safest and most business-friendly state.
- CAN YOU HIDE MONEY IN AN ANONYMOUS LLC?
While the anonymous trust structure in an anonymous LLC does enable its owners to hide the ownership, it doesn’t facilitate hiding any asset, including cash. However, you can make the most out of LLCs, especially out of anonymous LLCs, in terms of tax advantages, and other fees.
