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Preserving Anonymity in a State that Discloses Ownership Information

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Most states require disclosure of ownership information, and only a handful of states do not.

Examples of states that require disclosure of ownership information include California (CA), Florida (FL), Illinois (IL), New York (NY) and Texas (TX), just to name a few. In such states, you cannot form a company without disclosing who owns the company.

For All States, Except California

To get around this issue, we recommend forming TWO LLC’s. The first would be a holding company, whose only purpose is to own the child LLC. The holding company (or parent) would be an Anonymous LLC who owns a local, transacting LLC in your home state (the child).

The purpose of the child is to conduct business in your home state, to have bank accounts, and do whatever it is you want to do business as. You don’t own the child. You own the parent, and the parent owns the child.

Then, when we register the child in your home state, we disclose the ownership as the parent, thereby preserving your identity.

For California Only

In California only, our recommendation is very similar to the above for all other states, with one important difference.

First, we recommend forming TWO LLC’s. The first would be a MANAGEMENT COMPANY (not a holding company), whose only purpose is to MANAGE the child LLC. The management company (the parent) would be an Anonymous LLC that manages a local, transacting LLC in California (the child).

The purpose of the child is to conduct business in California, to have bank accounts, and do whatever it is you want to do business as. You WILL OWN the child, but the child will be MANAGED by the parent. Parent is a “Member Managed” LLC (no FEIN needed). Child is a “Manager Managed” LLC, with the parent as its manager.

Then, when we register the child in California, we are required to either disclose the owner(s) or the Manager, so we disclose the managing LLC to preserve your identity.

Need Help Picking the Right Company to Form?

We’re proud to announce the world’s first (so we think) AI-based entity selector tool. It is in BETA (still a PROOF-OF-CONCEPT), but factors in the state (or states) where you conduct business, whether you want anonymity, tax issues (including the Trump Tax Reform Act of 2017) and much more. It only takes a few minutes.

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12 comments

  • Hello Larry,
    I am thinking about doing real estate investing. Recently, I read alot of info regarding Anonymity setup and learning toward WY as a privacy holding LLC.
    I do have a question for you based on info I gathered from listening from youtube. You need an initial nominee manager to be listed on the SOS website, then they resign and you will be appointed as an undisclosed manager manage WY LLC to reach goal of anonymous. However, the one I confused was since name of initial nominee is publicly available, anyone can see them as managers and might assumed owners of the company. As result, fraudulent activities might happen without actual owner’s knowledge or aware of.
    What you can do to prevent it?

    Thank you for sharing

    • Hi, Ryan.

      Your information isn’t exactly correct. We do NOT recommend a “nominee manager”. There really isn’t such a thing, although I’m aware some of our competition does this and recommends what you propose.

      The issue is two-fold. First, you do not need to declare a Manager (or Members) in WY at all, so why do it? Second, if you do declare a Manager, and then the Manager changes, you’re supposed to keep the information filed with the Secretary of State up-to-date. By not doing so, in order to hide something, will simply expose you to potential personal liability should a plaintiff’s attorney seek to “pierce the corporate veil.”

      It’s best to hire our firm (or another attorney), to make sure things are done correctly for the long-term.

      Larry.

  • Hi Larry. I have spent a lot of time reading your articles, and I have to say I have learned a lot. Thanks for your information.

    I do have some questions.

    1. If I want to have my LLC in Illinois, can I create a blind trust, which will be also located in Illinois, and put it as the owner of the said LLC?

    2. Is this method still preserving my anonymity?

    3. Is that different than having a holding LLC and a child LLC? If so, what are the pros and cons of each method?

    Sorry, I don’t know if my questions are clear.

    • Hi, Liam.

      Thank you for your questions. Unfortunately, we really cannot weigh-in on trusts. The reason is they are very state specific (so what is true in one state, is not always true in another state). And, trusts do not make great business entities for a number of reasons.

      You can certainly do what you propose, but I would recommend you consult with a trust and estate attorney in IL to answer your questions, and if you decide to go forward, then to use that attorney to do it.

      We get a few clients coming to us after the fact — they tied a LLC and trust together somehow — and then ended up getting sued when they tried to sell real property out of the structure, only to learn that the title company would refuse title insurance, thereby violating the purchase agreement they signed to sell the property.

      It’s important to put things together carefully when you’re doing a trust, otherwise you could have real problems getting property out of such a structure.

      That’s why we simply don’t recommend it. That doesn’t mean it could make a great structure, in the right state with the right people handling it, but it’s hard to sell stuff like that on the Internet, at an affordable price, for folks in all 50 states.

      Good luck to you.

      Larry.

  • Its a very interesting concept but it seems to get messed up if you want to be treated as a S corp for tax purposes. How do you do that and maintain anonymity?

  • Thank you so much for this article. It’s very informative! I am running into an issue where I will need a business license and a home occupancy permit in my town in California. Apparently, the physical address (which cannot be a PO box or virtual address) is said to be available publicly per the city planning website (on the business tax receipt). If I were to do a parent and child LLC for privacy sake, it seems that I will still not be able to avoid the disclosure of my home address. Have you ever encountered a client in this same situation and is there an option I’ve not thought about? Thank you for any opinion, guidance, or suggestions.

    • Hi, OC.

      Great question, and yes, we’ve had clients run into this on occasion.

      It’s a real problem for us, simply because we aren’t aware of all the local rules and issues, which can change from one administration to the next.

      When clients run into this problem, they usually resolve it in one of two ways. First, and the least desirable option, is to obtain a small lease and/or virtual address in another locality that permits virtual addresses (i.e. the next town over) — assuming you’re not actually doing something in your own the law otherwise requires you to disclose and/or obtain a license and/or registration (in such instances, I really don’t know what to tell you).

      The second way, and the most desirable, is to have a chat with city hall and explain your situation. What most cities want, is the tax base of businesses in their city, and they also have a vested interest to promote the health and well-being of their citizens — and if there’s a way to protect the privacy of business owners under the right circumstances, we’ve seen cities being sympathetic to that. Of course, a city’s vested interest also means it wants to make sure local ordinances are being followed, that unsafe business practices are properly operating, etc, etc, so you need to balance your needs of privacy / security with a city’s need for safety, etc.

      I hope that helps. It’s not a specific answer — it’s something you need to work with, given your local circumstances.

      Good luck. Larry.

  • Great articles Larry! I’m learning a lot. I noticed that the Florida articles of organization on sunbiz states that listing the LLC members name and address is optional.

    • Hi, Michael.

      Sunbiz can be frustratingly confusing. When you read their material, it does indeed appear that you do not need to disclose Members (only Managers). However, there are a numbers of problems:

      • Sunbiz requires entry of at least one Manager or Member, before permitting you to the next screen, when creating a LLC.
      • Florida requires annual reports, and there, it is not optional. You must disclose at least one Manager (if Manager Managed) or one Member (if Member Managed).
      • Like all states, Sunbiz requires disclosure of the Organizer and Registered Agent (so if you want anonymity, you’re going to need help filing in Floriday anyway).
      • Banks in Florida are particularly concerned with ownership information at Sunbiz. We’ve heard of companies not being able to get bank accounts, without listing at least one Member (I assume such folks have submitted their paperwork by paper, versus the online form).

      So, you cannot get anonymity in Florida, without doing the parent/child setup we recommend in this article.

      Larry.

  • Larry,

    I had read all your articles and it’s amazing all I learned from you. Thank you for sharing your knowledge.

    I have a question for you. If a form an LLC in NM, let’s say the name is MyCOMPANY INC, as a parent company, the child company I create in Florida, will be under MyCOMPANY INC and no personal name will be needed?. Can I just create an LLC in Florida just using the NM LLC?. This is the part that is not clear to me when it comes to preserving my personal identity.

    Thanks!.

    • Hi, Mark.

      Thank you for your kind words.

      The quick answer is yes, you are correct. The longer answer is that we need to disclose ownership information, organizer, registered agent and physical mailing address. The key is to not use information that can tie back to you personally and therefore be disclosed by a secretary of state.

      Therefore, having an anonymous holding company owning a Florida operating company is how to prevent ownership information being disclosed by the State of Florida (actually, ownership information is being disclosed, but it’s the holding company that is disclosed, not your personal information). Hiring an organization like us to deal with the rest is how you prevent your name from showing up with the other pieces, including organizer, registered agent and physical mailing address.

      Larry.

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