Form an LLC Anonymously (How to Keep Your Personal Details Private)
If you want to form an LLC and maintain your privacy as you build your business in the United States, this information is for you.
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If you want to keep your information private while setting up your LLC, a common option is forming an anonymous LLC. This information is to help you understand why and how foreign entrepreneurs choose to start an LLC anonymously and which states make that process easier.
What is an anonymous LLC?
Typically, when setting up a regular LLC in any state, the applicant must provide details on the formation documents. The required information can include the names of the LLC members, officers, managers, and perhaps others with authority. The documents can become public records.
An anonymous LLC enables business owners to remain unidentified in the formation documents. There is no legal distinction between a traditional LLC and an anonymous LLC in terms of liability protection or any other benefits the LLC structure provides.
Anonymous LLCs are often called “private LLCs” or “confidential LLCs” in the public domain.
Why form an anonymous LLC?
In many circumstances, personal identification can be very sensitive information. There are several practical reasons why foreign business owners want to create an LLC without revealing their personal identities.
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For suitable branding
In many businesses, owners want to develop a personal brand, for example, in fashion, jewelry, and other original design-driven enterprises. In those cases, the owner often prefers to use his or her own name as the business name. But, depending on the type of business, LLC owners may not want to have their personal names used for marketing. In some situations, having their names prominently featured can hinder growth or create confusion for shoppers.
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For identity theft protection
If you have experienced identity theft, have been targeted by fraud perpetrators, have been stalked or otherwise victimized, you may prioritize protecting yourself by keeping your identity concealed in every possible way. Forming your LLC anonymously enables you to prevent having your personal information made public.
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To minimize controversy
If the nature of your business is controversial in some way, you may feel very strongly about keeping your personal identity separate from it vs. prominently associated with it. Especially if there is potential for negative reactions from some segment of the public to your business dealings. For example, if your business supplies a product to which some groups object, forming an anonymous LLC may be advisable to help protect yourself from adversarial actions.
Myths regarding anonymous LLCs
Myth 1: Your privacy is guaranteed by an anonymous LLC.
Registering a private LLC shields your identity much better than including it on the registration documents on file with the Secretary of State. However, there is no guarantee that your personal information will remain private.
- Banks will require you to reveal your personal identity to them.
- The Internal Revenue Service (IRS) will demand that you provide your personal identity in your tax filing, along with your business name.
- Your LLC formation service, your registered agent service, and your bank official can be ordered to appear in a civil court case and reveal your identity.
Myth 2: As a foreigner, you cannot legally set up an LLC anonymously in the United States.
You can register an anonymous LLC in the U.S. as a foreigner, just as an American citizen can set one up. Some states have systems in place to make registering a private LLC much easier than others do by including anonymity options in their standard registration process.
Myth 3: You don’t have to pay taxes with an anonymous LLC.
It is a very common misconception that if you form an anonymous LLC, you will not have to pay any taxes. This is false and you will pay taxes just like any other LLC, anonymous or not.
Myth 4: Anonymous LLCs mean no legal trace.
Many people think that if you form an anonymous LLC, there will be no trace of all your business dealings which is not true as both the IRS and the government. will be aware of any business transactions that you conduct.
Myth 5: Anonymous LLCs are illegal.
Another misconception exists about anonymous LLCs that they are illegal LLCs and are involved in shady business. However, this is a false allegation and anonymous LLCs are completely legit. The only thing that anonymous LLC owners are looking for is privacy since they don’t want their personal lives to be scrutinized by anyone.
States that help with anonymous LLC formation
Currently, there are four anonymous LLC states in America. These are states that offer registration of LLCs anonymously as a standard approach:
- Delaware
- Wyoming
- New Mexico
- Nevada
Advantages to anonymous LLC formation in Delaware
Delaware is widely acclaimed as one of the best states for LLC registration. Registering your business entity anonymously in Delaware can protect your privacy and that of other members of your LLC. This can help make it more difficult for potential perpetrators to intrude on you or your co-members of your Limited Liability Company. There are abundant other advantages to forming your LLC in Delaware in addition to preserving your anonymity.
For example, in Delaware LLC owners enjoy:
- Beneficial business laws, including flexibility in LLC structures. Low state fees, low state income taxes, and other comparatively affordable costs for LLC registration and maintenance, together, make the state an appealing haven for business owners.
- Delaware offers robust governmental support for LLCs and other business types. Delaware’s Court of Chancery is the nation’s most esteemed group of business law adjudicators. Delaware also has one of the most experienced state governments in LLC formation.
Advantages to anonymous LLC formation in New Mexico
New Mexico is known as a generally very business-friendly state and a favorite of many entrepreneurs, both foreign and domestic, who want to set up a traditional or anonymous LLC. A New Mexico LLC offers business owners increased privacy compared to most other states.
- In New Mexico, anonymity is rather built into the standard LLC registration documents and process. That means the state does not require that LLC members or managers be named on public documents included in the set of forms and other instruments for registration.
- All LLC registrants in New Mexico benefit from the state’s very strong privacy laws in contrast to most other states. These help in maintaining a business environment in which LLC members can run their companies not only with low state fees and strong liability protection, like the other popular LLC states, but also with greater confidence in the preservation of their privacy.
How to form an anonymous LLC
In Wyoming, Delaware, Nevada, and New Mexico, starting an anonymous LLC is a seamless bit of the normal LLC step-by-step formation process. If you want to set up an anonymous LLC in any other state, you can do it, but it may be a more involved process.
Some states require fewer details than others. Yet others require even more ownership information, making it more challenging to preserve your privacy in the LLC formation process.
If you are using an LLC formation service with a registered agent service, they may be positioned to allow you to use their identity on your formation documents and Annual Report. That’s in addition to the standard contact information they typically supply for LLCs to use for receiving mail at their service address.
If using your registered agent contact information in lieu of your own identity on the formation documents is not possible, you may be able to use the general steps below to form an anonymous LLC. This may be your most straightforward option, especially in states that require more ownership information, which complicates the effort to keep your personal details out of the public eye.
The process for forming an anonymous LLC in the states that feature such private LLC registration is substantially the same as filing a traditional LLC. However, if you want to convert your existing traditional LLC to a private LLC, below is a process that works to accomplish that.
How to convert an LLC into an anonymous LLC
- Form a private LLC in one of the four states with the laws that are most supportive of anonymous LLC registration. Set up a single-member LLC, in Wyoming, for example.
- Your LLC formation service can serve as the registrar, listing their address as your registered agent address. The Wyoming LLC you’ve registered will serve as a so-called “shell” LLC for you.
- Use the same process as prescribed for your LLC’s home state to get an Individual Taxpayer Identification Number (ITIN) from the IRS.
- Use the same process as prescribed for your LLC’s home state to use your ITIN to obtain an Employer Identification Number (EIN) from the IRS.
- Use the EIN to open a business bank account for your new private LLC.
- During your registration process, list your Wyoming LLC, for example, as the “officer” or “manager” on your LLC formation documents. This enables you to remove your personal information from the public record while creating a paper trail proving that you are the owner of both companies.
- Open a bank account for your business in the state where your original LLC is registered. Present all of your LLC formation documents to the bank rep for your registration in your original state and your new state LLC (Wyoming in our example). Expect your bank to require your cooperation in verifying that you are the owner of the new LLC.
The above few steps are generally sufficient to establish a private LLC. This parallel process enables the applicant to start doing business in the U.S. and operate in compliance with state and federal law while maintaining anonymity in LLC registration documents and processes.
FAQs
What are the disadvantages of having an anonymous LLC?
With anonymity in your LLC, it can be more challenging to establish credibility and inspire the public’s trust in your company. Also, you will still not be spared from the requirement to disclose your identity to your bank and the IRS. Further, you could still be required to reveal your identity in a civil court case if your business is sued.
Can I remain anonymous to the U.S. bank where I open a business bank account?
U.S. banks require a physical address to open an account. Do not give the bank a P.O. box number, your registered agent service’s address, or any other unacceptable address. You must provide the proper home address or other permissible location as required by the bank. Your bank account information is at relatively low risk of becoming public information, depending on how you use the account.
Can you change an existing regular LLC to an anonymous one?
After your personal information has entered the public record, it is unlikely that you will succeed in having it completely removed. But, there are actions you can take to help make your information private. You can amend the details on your LLC documents on file with the Secretary of State in the state where your business is registered. Or, you can dissolve your existing LLC and form a new one anonymously.
Can I form an anonymous LLC if the state where I want to register does not offer it?
Generally speaking, even in states where anonymous LLC formation is not common, there may be a process that still allows you to start a private LLC.
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