While it may sound mysterious and intriguing, an anonymous LLC (also known as a private or confidential LLC) is like a regular Limited Liability Company, except its members are not publicly identified by the state. The names, addresses, and contact information for members remain private and do not become part of the public record or get published on the state website.
Not all states grant LLC owners anonymity. But depending on the circumstances, business owners in a state that prohibits anonymous LLCs may be able to form one in a state that does allow them. Discussing your needs and options with an attorney to ensure you comply with all laws while setting up an anonymous LLC to protect your personal information is beneficial.
It’s important to keep in mind that LLC owners will never be completely anonymous. An LLC’s members must be reported on the business entity’s Beneficial Ownership Information Report (a reporting requirement that went into effect in 2024). Also, financial institutions, vendors, the IRS, and other parties may be granted access to an LLC’s owners’ information.
Pros and Cons of Forming an Anonymous LLC
Why would you want to hide your ownership of an LLC? Here are some scenarios for registering a private LLC:
- Someone purchased real estate and wants to keep their transaction confidential.
- A business owner is a public figure or celebrity and wants to keep their new venture under wraps.
- An employee who has decided to start a side business may want to keep their identity hidden so that their current employer doesn’t prematurely catch wind that they plan to leave their position.
Sometimes, business owners simply prefer to form an LLC anonymously because they want to keep (as much as possible) their names and addresses out of Google and other search engines. There may be other reasons for wanting to remain anonymous as well.
Let’s take a moment to explore some of the potential benefits of registering a company as an anonymous LLC:
- Simplicity! Forming an anonymous LLC is less complex than incorporating a company as a C Corporation.
- It may help prevent malicious individuals from stalking or harassing LLC owners.
- It can help preserve LLC owners’ reputations if the business receives negative publicity.
- An anonymous LLC has the same tax and management flexibility and limited liability features as a regular LLC.
Along with the possible benefits of registering an anonymous LLC come some drawbacks:
- Anonymity is not 100% guaranteed. The state, bank, IRS, Financial Crimes Enforcement Network (FinCEN), clients, partners, and vendors may be privy to the LLC owner’s private information. The privacy protections given to owners of anonymous LLCs vary from state to state.
- The anonymous LLC’s registered agent or other third-party person or company that does business with the LLC may be required to expose the LLC’s owner’s personal information if subpoenaed by a court or government agencies.
- The LLC’s ownership may be disclosed to various parties if the business is targeted in a lawsuit.
Which States Allow Anonymous LLCs?
The information that states request or publish about LLC ownership varies and is subject to change. Therefore, check with your state’s Secretary of State (or comparable) office to determine the details they collect and share publicly.
Somethings to keep in mind:
- Some states require domestic and foreign LLCs to disclose their members’ or managers’ names when filing their formation documents, and they make that information available publicly.
- Some states do not request that information.
- Some states request that information but do not make it available to the public.
Also, some states allow LLC owners to use and name an attorney or other party as the LLC’s organizer.
Other Considerations and Reminders
- Contracts – If LLC members want to retain as much privacy as possible when entering into contracts between their LLC and other parties, these tips can help:Seek vendors that do not require disclosure of LLC members’ personal information.Ensure that the LLC, not an LLC member, is the named party in the agreements.On the name and title line, use “Authorized Representative.”Rather than use an LLC member’s signature, have an officer or manager with authority to sign agreements on behalf of the LLC use their signature to make the contract binding.If the agreement does not include a confidentiality clause prohibiting the other party from sharing LLC members’ personal information, request one be added. A confidentiality provision should hold the other party responsible if they — or their employees, contractors, or other representatives — disclose LLC members’ personal identities to third parties.
- Taxes –?The tax laws and rules for regular LLCs also apply to anonymous LLCs. By default, income taxes flow through to the LLC members’ personal tax returns. Anonymous LLCs, if they meet IRS requirements, have the option of electing S Corporation tax treatment, which can be beneficial for reducing LLC members’ individual Social Security and Medicare tax obligations.
- Beneficial Ownership Reporting Rules –?Like any other business entity considered a reporting company as determined by the Corporate Transparency Act, anonymous LLCs must submit a Beneficial Ownership Report to the Financial Crimes Enforcement Network (FinCEN). That filing discloses personal information about LLC members and company applicants.
- No 100% Guarantee of Owner Anonymity – I covered this early on in this article, but it bears repeating. The IRS, other tax authorities, and the LLC’s bank require members’ personal information. Likewise, if an anonymous LLC gets sued, the plaintiff could subpoena organizations that do business with the LLC to identify the LLC’s members.
- Business Compliance –?Anonymous LLCs must fulfill the same ongoing compliance requirements as regular LLCs. Therefore, it’s critical for LLC members to learn what ongoing filings, reports, and fees they must submit so that the anonymous LLC stays legally compliant and in good standing with the federal, state, and local governments.
