Forming an anonymous company is something every serious business should consider. There is no benefit to putting your personal information online. Have you ever considered posting bank account numbers to Facebook or Tweeting it? Of course not. So why create a company in a state that forces you to make private information public?
A private company has the benefits of a traditional company, i.e. limited liabilities and potentially lower taxes. It also allows you to avoid aggressive creditors, needy friends and family, and inquisitive neighbors.
Going into business makes you a high value target. However, many attorneys are lazy and will not aggressively pursue you if they cannot easily find your assets. Nobody sues the homeless and you will appear broke.
Anonymous LLC US States
Perhaps you have already made this mistake – you set up an LLC in some state and all a creditor had to do was check the secretary of state’s website to find out that you were a member or manager of that LLC. Once a creditor discovers that you are a member or manager of an LLC, they know that you are conducting business and will assume that you have deep pockets.
In fact, each year, more than 15 million civil cases are filed in the United States. Many of these cases are brought by people looking to score a big payday by filing a frivolous lawsuit against a business owner, investor, or someone they believe to have deep pockets.
Nowadays, every investor or business owner has a target on his or her back, if for no other reason than the fact that lawyers need to recover money to stay in business. What makes it even worse is that it is now easier than ever for someone to find out your personal information on the internet. This includes your business interest and your ownership of assets.
The Importance of Anonymity
Because of the issues outlined above, anonymity is a key aspect when it comes to asset protection. Anonymity means ensuring that no one knows what assets you own, except those who need to know.
Staying anonymous is a good way to protect yourself and avoid a lawsuit. But, many investors and business owners fail to achieve anonymity because their attorneys don’t know what they are doing, what their client’s goals should be, or where the true risks lie.
However, in a few states (Nevada, Wyoming, Delaware, and New Mexico), it is amazingly simple to protect your assets with a business structure that will not require your name to appear on any public document and where no one will ever know of your involvement.
In these states, one of the easiest and most effective ways to achieve anonymity with regards to your assets is by filing an anonymous LLC that will then take ownership of these assets.
What is an Anonymous LLC and How Does it Work?
Each state requires certain information to be disclosed when you form a business entity. This information generally includes, amongst other things, the names of the officers and directors of a corporation, the general partner of a partnership, or the manager of an LLC.
However, in some states, particularly Nevada, Wyoming, Delaware, and New Mexico, once formation documents are filed, there is no need to update the required information. This allows you to use a temporary owner, director, manager, or general partner called a nominee when forming the LLC.
The nominee’s name and contact information will show up on the public record. But, immediately after, the nominee will resign so that you can assume control as the reappointed and undisclosed manager of the LLC.
The Benefits of Forming an Anonymous LLC
The ability to use a nominee during formation is the key to creating an anonymous LLC that can be used to cloak your ownership of certain assets, thereby shielding them from your creditors and protecting them from lawsuits.
It works as follows:
- You create an LLC in New Mexico, for example, using the name of a nominee manager.
- After the LLC is filed, the nominee manager resigns and you become the undisclosed manager of your company.
- Once this entity is set up, you can then create multiple member-managed LLCs in other states that will all point back to your New Mexico LLC.
When you set up a member-managed LLC, you must normally list the owner. But in this case, the only owner of record will be your New Mexico LLC.
If someone looks for the owner of the member-managed LLC, all they will find is the name of your New Mexico LLC. If they look at your New Mexico LLC, all they will find is the name of the nominee manager, who is no longer there.
This way, when a plaintiff’s lawyer runs a search on you to see what assets you have that can satisfy a lawsuit, they will not find any in your name. This can render creditors more willing to accept a settlement or even discouraged them from filing the lawsuit in the first place.
One anonymous LLC can provide an unlimited amount of protection for every LLC you create in all 50 states. And it all starts with forming an LLC with a nominee manager in New Mexico, or one of the other states where this is possible.
Additional LLC Benefits
This article has focused primarily on privacy, but there are additional benefits to starting a Corporation or LLC over operating as a sole-proprietorship. These include, but are not limited to, limited personal liability in case of a lawsuit, potential lowering taxes, and appearing more professional when dealing with clients. Please visit our website for additional information.
By Cynthia Davies
Founder, Cindy’s New Mexico LLC Formation Service