What is an anonymous LLC?
Simply put, an anonymous LLC is just like a “regular” LLC, except that the ownership details of the company are not published for any Tom, Dick or Harry to review. In fact, some states don’t even share the information with the IRS. They are also known as privacy LLCs.
When an LLC is formed, most states require that ownership information be disclosed. This would be something like the name of each owner and their contact information. Most states turn around and publish this information on the internet for anybody to look up. Some states collect the information, but don’t publish it online. Finally, a couple states don’t collect any ownership information and therefore can’t publish anything online.
The benefits to using an anonymous LLC are increased privacy, avoiding harassment by ne’er-do-wells (a.k.a. wastrels/slugabeds), and confidentiality.
Who would use an anonymous LLC?
I love me an anonymous LLC! Why? Because as an asset protection attorney, it’s a great, flexible tool to accomplish many objectives. An anonymous LLC can be quick, simple way to privately own things: a car, a boat, or a piece of land for example. Some people don’t want other people up in their business. Some people don’t want to be on a mass marketing mailing list because of a certain purchase they made. Solution: own it or purchase it in the name of an LLC with no name or home mailing address attached to it.
Landlords use anonymous LLCs to keep angry tenants from showing up at their doorstep. Employees start side businesses without their bosses knowing. Celebrities, judges, law enforcement own homes in anonymous LLCs for privacy.
Can they get away with anything?
There’s no shortage of negative stories about anonymous LLCs. You’d think, from reports like the “Panama Papers,” that these LLCs are all about avoiding taxes and hiding dodgy deals. The truth is that an anonymous LLC won’t completely hide the owners or shield them from any responsibility or liability. Every LLC requires a registered agent who will receive notice of any lawsuit against the LLC. The registered agent is required to have contact info of owners. So while ownership information may not be available online, owners can be reached through the courts.
Best states for anonymous LLC
The most popular states for anonymous LLCs are Delaware, New Mexico and Wyoming. There are pros and cons to each state. My preference is for Wyoming because the fees are low and the state churns out the LLC paperwork like they were on a conveyor belt. Maintenance fees are high in Delaware. New Mexico is best for having no annual requirements, but they are as slow as Christmas. If you hate Amazon Prime, waiting six weeks for your New Mexico LLC is just for you!
Colin Ley is a Seattle asset protection attorney. He is also the co-founder of LayRoots along with his wife, Shreya Ley.