By now, you’ve probably heard about limited liability companies and the benefits they offer to their members. Investopedia tells us that an LLC is a business incorporated to help protect the assets of its owner. However, LLCs don’t have to be transparent organizations. Anonymous LLCs do more than just protect their members’ assets. They go a step further, protecting the identities of their members. It may seem a bit underhanded to have an anonymous LLC, but the business structure does have its uses in a legitimate industry.
Why An LLC?
If you’re looking at a business structure that provides liability protection, but at the same time gives you flexibility in how your business is structured and taxed, an LLC is the obvious option. LLCs are a suitable business structure for small businesses because of this flexibility. LLCs tend to provide a lot of specific benefits to business owners.
Limited liability companies, as it says in the name, limit your liability in case of legal action. Most business owners who decide to incorporate an LLC, do so because of the asset protections that the LLC grants them. If the business becomes the subject of a lawsuit, the plaintiff cannot access the assets that the members hold as personal assets to become part of the settlement. However, this protection doesn’t extend to personal suits. If you’re being sued directly, the LLCs asset protections don’t extend to you.
Estate Planning Purposes
Some smart businessmen use LLC as holding companies to plan out their estates before they die. Estate planning is a big business in itself, but incorporating an LLC and assigning shareholders to certain key positions sidesteps the costly and time-consuming probate process. We’ve already seen how LLCs provide secure asset protection. Using them in estate planning is just a continuation of this benefit.
LLCs are a useful tool for individuals who want to benefit from pass-through taxation. The IRS doesn’t have a specific category for LLCs, and as such, doesn’t even tac them. However, the owners are liable for paying taxes based on their income generated from the company.
While it might seem as though the LLC doesn’t really offer coverage for taxes, you’d be surprised at how enterprising owners use these business entities. When a business owner holds several companies, if the LLC makes a loss, they can transfer that loss over to another income stream and pay less taxes as a result. The approach is a lot more complex than this simplified explanation, but a skilled accountant may be able to explain in more detail.
In most cases, when a business becomes incorporated, the members of that business get paid profits based on their individual ownership percentage. Thus, if two people hold equal ownership of a particular LLC, they would both get equal shares in the profits. LLCs don’t have to operate in this way, however. Owners might create a separate binding agreement that, despite equal ownership in the business, the profits may be distributed in a different ratio.
In businesses where there are multiple individuals holding down separate portfolios, there might be a need for an agreement like this. Silent partners, for example, only hold stock in the company and contribute nothing to its operation. The members of the LLC may determine that because of this, they are entitled to less of the profits of the business’s operation. Usually, these agreements would have to be approved by a majority of members before they go into effect.
Why Opt for an Anonymous LLC
Anonymous LLCs are useful business structures for avoiding lawsuits, but they are also just as helpful at obscuring where your earnings are coming from. In a climate that sees a lot of crime perpetrated against individuals, it may be in your best interests to hide the fact that you’re operating a business. If the company manages to harm an individual, the person can take the enterprise to court. However, if they know who you are, as the business owner, they can file a separate suit against you, which the LLC will be unable to stop. At that point, your assets will, once again, be at risk. Anonymous LLC taxes is another reason to choose anonymity. The IRS permits more deductions from an anonymous LLC than it does from a sole proprietorship.
Best Places to Register an Anonymous LLC
Anonymous LLCs are not a simple corporation type. There are individual states that allow businesses to be registered anonymously, while others require transparency in the owners of a company. Delaware offers great business-friendly laws and doesn’t have a corporate income tax. New Mexico provides the most robust privacy protection and is considered the best state for registering an anonymous LLC. Wyoming is among the most tax-friendly states in the country. If you’re concerned about paying too much in taxes, you should consider setting up your anonymous LLC in that state.
How to Register an Anonymous LLC
You will need to contact a representative in the state to help you register your LLC. Lawyers perform the process of setting up an anonymous LLC because they are the most familiar with the process and know how to make the registration impenetrable. You will also need a mailing address, which may be a giveaway for someone trying to remain anonymous. Fortunately, many agents allow you to use their service to set them up as the business’s registered agent. Their address will be the one visible on the business filing for communication, not yours. After that, it’s all about filing the paperwork and paying the fees.
Anonymity is Not Just for Criminals
It’s a common misconception that anonymous LLCs are shadowy organizations involved in crime. Black Enterprise informs us that there is an upsurge in the registration of anonymous LLCs are business owners seek to uphold their privacy amid the information age. With data leaks happening so often, it’s understandable that business owners would want to save themselves. Anonymous LLCs give the protections of an LLC with the right to their own safety and privacy.