Real estate investors love the liability and asset protection offered by a Limited Liability Company (LLC). Do you know what makes an LLC even better? When it's completely anonymous. Fortunately, some states offer you the chance to escape from unnecessary legal liability in the form of an “anonymous” LLC.
An anonymous LLC protects your privacy and keeps your ownership of the company out of the public record, which gives you more flexibility and security in managing your real estate investments.
If you're intrigued, keep reading. We'll explain everything you need to know about how to hide ownership of a company using an anonymous LLC.
Whenever you start a new LLC, you have to file formation documents with a state government entity, often the Secretary of State. In most states, you have to provide the name of the person or entity forming the LLC and a registered agent. The registered agent is the person or entity responsible for receiving legal service and other essential notices on behalf of the LLC. Some states will also require you to list the LLC's manager on the formation documents.
When you file your LLCs formation documents, they become part of the public record, and anyone can access this information. If you'd prefer to keep this information private, there are several methods you can use to form an anonymous LLC.
With an anonymous LLC, sometimes referred to as a private LLC, the company's owners are not publicly listed in state records, as they would be with a regular LLC. Keeping things anonymous offers a variety of benefits to you and your company. We've listed some of the most valuable advantages of LLC anonymity below.
Starting an anonymous LLC to hold your real estate investments can help you keep your properties and financial status out of the public eye.
Forming an anonymous LLC allows you to protect your privacy by keeping your name and address off the internet.
If you keep your identity and address anonymous, you can avoid unwanted harassment from salespeople, competitors, or anyone else who is interested in you or the properties you own.
The world is full of "professional plaintiffs" and other opportunists who are looking to make a quick buck. Keeping your name off the ownership records for your LLC can help you avoid frivolous lawsuits.
Holding your real estate investments in an anonymous LLC can help you shield them from lawsuits and your personal creditors.
There are a handful of methods you can use to create an anonymous LLC. The easiest way to do it is to select a state that allows you to incorporate anonymously.
The following states will let you create an LLC without making your name public record:
Establishing an anonymous LLC in any of these states lets you keep your name off the LLC's records. Which state you should choose for your LLC depends on what benefit is most important to you.
We've listed the most significant small business benefits offered by three of the most popular states below.
New Mexico is the only state that allows you to form an LLC without disclosing the members' names to the government, making it the option that offers the most privacy.
Delaware is well known for its business-friendly laws and doesn't require corporate income tax. You'll only have to pay a $300 franchise tax each year.
Wyoming is one of the most tax-friendly states for anonymous LLCs, with no corporate income tax and annual fees as low as $50.
If you want to create an anonymous LLC but don't want to start it in Delaware, Nevada, New Mexico, or Wyoming, you're not out of luck. Property owners can form an anonymous LLC in other states; there are just a few extra steps involved.
First, start an anonymous "holding company" in Delaware, Nevada, New Mexico, or Wyoming. A holding company is a business entity that is created to own other businesses and hold assets. Holding companies usually don't conduct independent business operations; they just profit from the companies and investments they own.
Once you've created your anonymous holding company, you can start an anonymous LLC in any state by simply listing the holding company as the owner. Since no records tie you to the LLC and no records connect you to the anonymous holding company, your ownership interest in the LLC remains private.
If you're looking to protect your privacy and keep your ownership information out of the public record, the answer is a resounding “YES!” Forming an anonymous LLC will allow you to guard your personal information while shielding your investments from creditors, lawsuits, and harassers.
Scott Royal Smith is an asset protection attorney and long-time real estate investor. He's on a mission to help fellow investors free their time, protect their assets, and create lasting wealth.
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