What is an Anonymous LLC and How to Form One
The Comprehensive Guide to Forming an Anonymous LLC
Many business leaders prefer staying anonymous when it comes to their financial interests. They don’t want the public to know about their business affairs, plans, and strategies. Keeping your business anonymous is also one helpful way to avoid lawsuits.
Potential lawsuits are one of the biggest reasons that so many business owners choose to hide their ownership information. Forming an anonymous company is also an excellent way to protect your business assets.
Today, the internet is swarming with online service providers that offer incorporation within certain states such as Delaware, Nevada, Wyoming, and New Mexico. These states value the privacy of business owners above anything else.
To form an anonymous limited liability company (LLC), you won’t be required to disclose members, nor do you have to provide the identities of company shareholders. Forming an anonymous LLC in these states also protects your business operations from creditors, be they corporate creditors or LLC.
There’s little difference between an anonymous and a regular LLC. Let’s dive deeper into what an anonymous LLC is, how it differs from the regular LLC model, and what it takes to form one.
How are anonymous LLCs different from standard LLCs?
An anonymous LLC is the same as any other LLC but with one difference – the names of the LLC members are not publicly available. The state that you register your LLC in protects the identities of shareholders.
Business owners can choose to remain anonymous for several different reasons:
- They want to prevent unauthorized and unwanted third parties from accessing their private and sensitive information;
- They don’t want cyber criminals to use their information against them;
- LLC owners can ensure liability protection from any potential claims that may result from conducting business operations;
- LLC owners such as landlords use anonymous LLCs to keep their real business location and residence private and away from tenants;
- Employees who start a side business may use anonymous LLCs to prevent their employers from finding out about their side operations;
- Anonymous LLCs allow owners to keep their private possessions away from prying eyes. These possessions are not related to their business and may include land, properties, boats, cars, real estate, arts, antiquities, etc.; and
- Protection against intrusive mass ads and marketing campaigns.
An anonymous LLC also provides an additional benefit for the owner – they can keep their professional and private life separate. It also allows them to purchase items anonymously that the public can’t link to them personally.
Pros and cons of forming an anonymous LLC
- Privacy protection – forming an anonymous LLC allows business owners to keep their sensitive information away from the public and protect their privacy.
- Confidentiality – when you register an anonymous LLC, you can keep all of your property investments, business assets, and other LLC information private.
- Lawsuit prevention – legal disputes are among the biggest concerns for any type of business. Since an anonymous LLC allows you to keep your identity and other business details away from the official LLC’s ownership records, it helps you to avoid frivolous litigation.
- Reducing the risk of harassment – protecting your business information and identity keeps your business affairs private and away from the public eye.
- Asset protection – the anonymous LLC model ensures a corporate veil of protection that shields your business assets from threats such as personal creditors.
- All of the benefits associated with forming a regular LLC – including limited liability protection, survivability, operating flexibility, and tax advantages.
While an anonymous LLC provides a number of advantages for business owners, there are also some downsides to keep in mind:
- Deal with IRS – even if you register an anonymous LLC in any of the four states, you’ll still have to deal with the Internal Revenue Service (IRS), financial institutions, incorporating services, and more. These entities collect your information and could use it for public purposes.
- Pay taxes – anonymous LLCs are still required to pay taxes.
- Subject to lawsuits – anonymous LLCs are subject to lawsuits that might result in the disclosure of owners’ identities.
- Third parties subject to lawsuits – any clients, partners, and other third parties doing business with anonymous LLCs are subject to lawsuits and the state’s legal system.
- Requires FEIN – forming an anonymous LLC requires a Federal Employer Identification Number (FEIN). This number is necessary to open a business bank account. Securing this number requires you to file your application on the IRS website.
- Registered agents subject to lawsuits – anonymous LLCs typically use incorporating services to handle the formation procedure. These services hire registered agents that are also subject to lawsuits.
What are the anonymous LLC states?
Nevada, New Mexico, Wyoming, and Delaware are the most popular states for forming anonymous LLCs. These states allow you to form an LLC anonymously.
Business owners aren’t required to disclose the identities of the managers, members, or owners when creating an anonymous LLC in these states.
Let’s quickly review some key information about forming an anonymous LLC in these states.
Nevada anonymous LLC
Nevada is an excellent state for protecting your business assets. It prevents creditors from accessing your corporate records.
Here are some positive facts to keep in mind when forming an anonymous LLC in Nevada:
- The LLC formation fee in Nevada is $75 + business license tax and managers/members fees. The total sum amounts to around $350 per year;
- Forming an anonymous LLC in Nevada allows for a high level of personal and professional privacy and anonymity; and
- Nevada excels at protecting your assets from creditors.
- Owners are required to submit the information of members and managers to the Secretary of State.
New Mexico LLC anonymity
Unlike Nevada, Wyoming, and Delaware, New Mexico is the only state that doesn’t require business owners to disclose the identities of members, managers, and owners or any additional annual reports.
Some other benefits include:
- New Mexico has no annual report fees;
- The state offers the strongest security and privacy for anonymous LLCs;
- Enhanced asset protection from creditors; and
- Perfect for realtors, consulting firms, online businesses, and small businesses on a budget.
- You become eligible for filing corporate income taxes; and
- Business owners are required to hire a registered agent to handle LLC formation.
Wyoming LLC anonymity
With high levels of privacy, security, and asset protection, Wyoming is a safe haven for those looking for the best debtor-friendly laws. If you form an anonymous LLC in Wyoming, you won’t have to worry about creditors.
- Top-level asset protection;
- LLC owners can avoid corporate income taxes; and
- The state of Wyoming keeps directors, managers, and owners’ information private.
- The state has an annual report fee which is around $50;
- The annual report requires you to disclose your name and signature;
- The LLC formation fee in Wyoming is about $100; and
- There’s also a renewal fee ($50) and a fee to hire an agent to handle the annual paperwork for you.
Delaware LLC anonymity
Even though businesses must pay some pretty hefty fees and taxes, Delaware provides the highest levels of privacy, security, and asset protection for LLC owners. The state offers access to the Court of Chancery, which handles all disputes regarding the internal affairs of LLCs.
Business owners also don’t need to disclose the names and identities of members, managers, and shareholders or their personal details on any public documents.
- Delaware doesn’t charge corporate income tax;
- The highest level of asset protection;
- A complete corporate veil of anonymity; and
- A perfect state for medium to larger corporations and LLCs.
- Delaware charges an annual franchise tax ($300); and
- To form an anonymous LLC in Delaware, you’ll have to hire a privacy organizer, registered agent, or incorporating service.
Wyoming and Delaware offer the advantage of no corporate income tax, while New Mexico doesn’t collect LLC information, nor does it have annual report fees or requirements.
Steps for forming an anonymous LLC
Now that you have some basic knowledge of what an anonymous LLC is, how it works, and what it offers, let’s talk about the steps for forming an anonymous LLC
Step 1: Figure out a name for your anonymous LLC
Your LLC journey to anonymity starts with choosing the right name for your company.
Since Delaware is the best place to form an anonymous LLC, we’ll use that state as an example. Delaware Code 18-102 regulates the naming of LLCs in the state.
The name of your LLC has to be unique and different from any other active and registered LLC name found in the Delaware Department of State. The name must include the LLC term. According to the state code, LLC owners aren’t allowed to use any term in the name that differs from the type of business.
You can also reserve your preferred name with the state before completing the registration process. You can either do it by sending an application to the Delaware Division of Corporations or online.
Step 2: Find a registered agent
A registered agent plays a vital role in keeping your LLC anonymous. They are the initial recipients of all business communications and official notices sent to your LLC.
A registered agent is in charge of forwarding all documents and communications to your LLC and signs all documents on your behalf, thus keeping your identity anonymous.
Step 3: Gather all of the required documentation
To form an anonymous LLC in Delaware, you’ll need to collect all of the required paperwork and file the documentation with the state. All registrants must have the LLC’s Certificate of Formation ready for presentation in a printed format.
You can find the required printed form on the official website of the Department of State. Simply visit the site, find the form, fill out the necessary information, print it, and send it along with a filing memo to the Delaware Division of Corporation.
Step 4: File it with the specific state authorities
Once you have all of the required documentation, file it with the state authorities of your choosing. Every state has a filing fee:
- Delaware – requires the LLC’s Certificate of Formation on paper and the filing memo ($90 filing fee);
- Nevada – requires an ePayment Checklist (if you’re paying by debit or credit card), a Customer Order Form, and an LLC’s Article of Organization ($75 filing fee);
- New Mexico – file LLC’s Articles of Organization ($50 filing fee);
- Wyoming – applicants need an LLC’s Article of Organization ($100 filing fee).
Forming an LLC outside of Delaware, Wyoming, Nevada, and New Mexico
If you don’t wish to form an anonymous LLC in the states that we mentioned above, it’s possible to do it in other states.
However, since other states don’t allow the level of anonymity you require, the formation will involve some extra steps.
Making your LLC ownership private requires you to form a single-member LLC in any of the four states on our list and one in your home state. You’ll need to hire a business attorney or an LLC formation service to help you with compliance by drafting an operating agreement.
Your registered agent will use their own physical address to enter your LLC into the register. When someone tries to find out who the owner is, all they’ll get is another LLC.
If you need help with forming an LLC in your state, you can find all the necessary information here.
If you live in Wyoming, New Mexico, Nevada, or Delaware, you can deal directly with an anonymous company with limited liability. You can also do this in other states, but that requires completing a few extra steps since other states don’t allow anonymous LLC owners.
While this type of LLC provides a certain level of privacy, the anonymity you receive only protects your information from the public.
Financial and government institutions (IRS and banks) will still know who the owner of the LLC is. Even as an anonymous owner of an LLC, you’re required to pay federal or state taxes when they are due.