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The Florida Double LLC is Double Trouble

The right and ability to conduct business anonymously is very important to some. This is why we’ve offered one of the safest, and arguably, most legal, anonymous LLC set-ups in the business — for about the same price as “the other guys.”

Although “hidden shell companies” receive bad press and a negative political narrative, the fact of the matter is criminals and terrorists will simply lie on the forms, and list fake names as owners of their companies. This information is simply not verified at the state level. Therefore, only legitimate, law-abiding citizens are hurt by state requirements to disclose ownership information.

Furthermore, it’s almost impossible to obtain a bank account, without disclosing legitimate information to the banks and the IRS. Therefore, it’s really difficult to become a tax cheat or hide money in the US. Don’t believe what you read about “hidden shell companies” or other private companies that hide the legitimate owner(s).

You think there’s no legitimate need to hide ownership information on a company? Think again. Our clients include abuse victims desperately trying to remain hidden from their former abusers. We also have clients in businesses that are harassed by the far left or far right in politics (think gun shops, reproductive rights and businesses that cater to the LGBTQ community). There are literally hundreds of legitimate reasons why law-abiding citizens may not want their personal names and information disclosed as an owner for a particular company. Read my previous blog article entitled, Panama Papers: A Lawyer’s Perspective, for more perspectives on this issue.

What is the Florida Double LLC?

Unfortunately for many individuals, their pursuit for anonymity and privacy will have them finding illegitimate solutions to this problem that will expose them to very real legal problems down the road. One of those illegitimate solutions comes in the form of “The Florida Double LLC”. This gem of an offering is provided by a company that actually says, “The only way to stay anonymous in Florida is by forming two LLCs that own each other.” These folks are clearly not a law firm, nor are they offering sound legal advice. Your first sign of trouble should be the lack of any specific information about this company, whatsoever, such as who owns the company or who are its founders.

This is just another example of legitimate business owners being taken advantage of. I wrote a knowledge base article that touches on why our law firm is better than the unlicensed legal providers (read the article), but this article really applies to any lawyer or law firm versus other providers on the Internet. Simply put, don’t rely on no-name vendors — find a legitimate business lawyer or law firm to help you.

In the case of this “Florida Double LLC,” what this company is doing, is creating two separate LLC’s and setting it up so that each LLC owns the other LLC. Because Sunbiz doesn’t verify or validate the information submitted to it, each company shows the other company as its owner in Sunbiz. Ta-da, anonymity problem is solved.

Unfortunately, the long-term legal problems have only begun.

The first, most obvious, and biggest problem with the Florida Double LLC, is that such a set-up can expose you to personal liability. See Fla. Stat. Ann. § 605.0205, Liability for inaccurate information in filed record. If this statute is invoked in a lawsuit against the LLC, the liability protection afforded the LLC will almost certainly be pierced — exposing anyone affiliated with the LLC’s to personal liability.

How can this statute be invoked in a lawsuit? The answer depends on whether you’re personally set-up as the Member or Manager of these LLC’s.

If you’re set-up as the Member of these LLC’s, the questions becomes, how are YOU (and any other owners) possibly exerting any sort of control or influence over the LLC’s? How are YOU (and any other owners) receiving income from these LLC’s? Finally, how are YOU (and any other owners) reporting taxes?

The answer to these questions, if the LLC’s are legitimately set-up using accurate information submitted to Sunbiz, should be “no, you’re not doing those things.” You’re not exerting any sort of control or influence over the LLC’s, you’re not receiving any sort of passthrough, distribution or owner-based compensation from the LLC’s, and you’re not reporting taxes at all, because you’re not a Member of the LLC’s.

If you’re set-up as the Manager of these LLC’s, we don’t have the control question anymore, but we do have the other two questions: How are YOU (and any other owners) receiving income from these LLC’s? And, how are YOU (and any other owners) reporting taxes?

The only way this can be a legitimate set-up, is to answer these questions as we have above. That you are not receiving income nor reporting taxes. But, then who is?

As an attorney, I relish an opposing party so set-up. We lawyers eat this stuff up like candy.

The second problem touches on what I mentioned above. Taxes. Just who is reporting taxes for these LLC’s? Where does the income go? What do you put down, on a W9 if the LLC is going to receive income from a third-party? Box #1 on the W-9 requires “Name (as shown on your income tax return)” for whatever entity will be reporting the income.

Don’t think for a moment, that a plaintiff’s attorney will not demand the tax forms of the LLC’s if they are involved in a lawsuit. Also, don’t think you can hide your income from the IRS. Your clients are submitting 1099’s to the IRS, the banks are submitting 1099-INT’s and 1099-DIV’s to the IRS, and merchant account providers (i.e. the companies, including Amazon and PayPal that you use to accept credit cards), are filing 1099-K’s to the IRS.

The Only Legitimate Way to Set Up an Anonymous LLC or Private LLC in Florida

The “Florida Double LLC”, as sold by our competition, will only create long-term legal problems for their owners. The only legitimate, legal, long-term solution to maintain your anonymity in Florida (as well as any other state where anonymity isn’t permitted), is to set up a proper “parent/child” relationship between two LLC’s. Specifically, one sets up a child Florida LLC, and that is the company you conduct and transact business with. That child is owned by an anonymous holding company, acting as a parent of the Florida LLC. The holding company does not transact business. It’s sole purpose is “Owning and controlling a subsidiary corporation incorporated in or transacting business within this state“, in compliance with Fla. Stat. Ann. § 607.1501(2)(k).

There is no short-cut to save money when trying to remain anonymous. You must have two separate companies, one of them an out-of-state company that permits anonymity (i.e. such as from New Mexico or Wyoming). You must pay for two separate registered agents. You must also obtain a separate mailing address, in compliance with Florida state law, that cannot be the registered agent’s address (read why).

Finally, be careful you who you do business with. Only a lawyer or law firm can provide attorney-client privilege and confidentiality, and only a lawyer or law firm will recommend sound legal solutions designed to protect you in the long-term — not short-term, quick fix solutions with a false sense of accomplishment.

To learn more about our Anonymous LLC solution for Florida, you need to look at two products: Our anonymous LLC’s and Florida LLC’s.

Law 4 Small Business, P.C. (L4SB). A little law now can save a lot later. A Slingshot company.

4 comments

  • Larry Great Article. I’m wondering if you can answer the few questions below?

    I reside in Florida and have a Wyoming LLC that has NOT done business anywhere yet.

    I want to create a Florida anonymous LLC for an online only business that will be selling products using Amazon’s FBA program and through other online outlets and wondering how to do this right?

    Could I have your firm be a registered agent for Florida?

    Can I use a “Regus” virtual office address for both the mailing and physical location without revealing my home address?

    How do I do that without revealing my personal address on the required us postal form 1583?

    In Florida it appears that the county business license and sales tax dept. requires that ALL the LLC’s managers and members names and addresses along with the social security numbers and EIN’s.

    Isn’t the Florida databases searchable?

    How do I work that out anonymous even with the Wyoming LLC because I own that too?

    Thank you.

    • Hi, Hugh.

      I apologize for the delay in getting back to you. I just came back from vacation, and getting through my emails and inquiries.

      (1) We have the ability to provide Registered Agent services for FL LLC’s. We do this, through a third-party service, which gives you the benefit of attorney-client privilege and confidentiality.

      (2) Yes, you can use a “Regus” virtual office address for both the mailing and physical location of your FL LLC.

      (3) You do need to reveal your personal information on Form 1583. You need to make sure Regus will maintain your confidentiality. Then, you need a third-party (such as us) to organize the FL LLC, using the Regus address. Quite simple, really.

      (4) In regards to local (i.e. county) business license and sales tax department, you’re going to need to talk with them. At the end of the day, the WY LLC (with its own FEIN), will be the only Member of the FL LLC. If that’s what the county folks are asking for, then you’re okay. If the county folks want to know who personally is running the show, you need to check with them on whether that information will remain confidential.

      (5) What Florida database? Sunbiz? Yes. But, I’m assuming your WY LLC is already anonymous, therefore the FL LLC will only have information related to us (as your RA), Regus (as your virtual address) and the WY LLC, as its only Member.

      Clear as mud? Larry.

      • Hi Larry,

        Thank you for your reply.

        (1) How much are your registered agent third party annual service?

        (2) Is Postal Form 1583 searchable somewhere?

        (3) All county and town business licenses REQUIRE every member/manager to be listed along with their resident address and FEIN and SS# to be listed.

        My understanding is that they will BLACK out only SS#s from the searchable or request[able] database. Same for Florida Sales Tax. I don’t see a way to stay anonymous here. Do you?

        (4) My understanding is that a Florida single member LLC is not secure and can be easily pierced. I wanted to create a two member Florida LLC with my revocable trust as one member and my WY LLC single member (me) anonymously filed LLC as a second member.

        Is this a secure way in Florida for LLC piercing protection as I don’t want to be personally liable?

        (5) After searching on Sunbiz.com, it looks impossible to keep names and addresses off for more than one year. After a year one needs to include all member/manager names and addresses. I found a lot just searching some neighbors’ names. Is there a solution to this in Florida?

        Thanks again.

        • Hi, Hugh.

          My answers to your questions are as follows:

          1. Our Registered Agent service (and pricing) is available here: https://www.l4sb.com/product/registered-agent/ (I don’t want to publish the price here, because we could change the price sometime in the future)
          2. Post Form 1583 should be confidential, although I suspect the USPS maintains an internal database that is supposed to be kept confidential
          3. In regards to remaining anonymous in a county / town that requires disclosure of member / manager information: At the end of the day, it is legally permissible for one company to own another company. Sunbiz in FL understands this, and permits identification of a member as being another company. I cannot speak for all counties and towns, although we’ve had a few clients hire us to figure this out in their location — and we’ve never been able to NOT resolve this. Sometimes it requires calling local authorities, other times it’s just submitting the correct information on ownership (i.e. another LLC).
          4. Believe it or not, you’ve mixed up two concepts when you refer to “piercing”. “Piercing the Corporate Veil” means the LLC is being sued, and someone wants to “pierce” its liability protection to go after the owner. Contrast this to “foreclosure” of a LLC, where the owner is being sued, and the plaintiff wants to reach into the LLC that is holding assets. Either way, FL isn’t a great state for sole-member LLC’s in either scenario. If this is an issue, courts are going to look at how things are setup to make a determination. I don’t think adding a trust as one member and a WY LLC as another member is going to help appreciably in either circumstance, but then again it’s better than nothing.
          5. Yes, the owner needs to be a non-person, i.e. an anonymous LLC. Then, in the annual report, you report the truth: That another company owners your FL LLC.

          Thank you. Larry.

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