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.
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22 Comments
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.
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:
So, you cannot get anonymity in Florida, without doing the parent/child setup we recommend in this article.
Larry.
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.
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?
Hi, Steve.
Not sure why you think tax status has anything to do with anonymity. Two somewhat unrelated issues, unless you’re trying to be anonymous with the IRS — if so, we don’t know how to help you there.
We did recently write a new knowledgebase article that addresses how to deal with S-Corp taxation with the parent/child structure, if you’re interested. Read, With a Parent/Child Structure, Which Company Should be Taxed Under Subchapter S?
Thank you. 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.
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.
Hello,
I have an LLC in Alabama as it is my home state. I want to transition to a Private Anonymous LLC. I know I will likely need a Holding Company with aParent Company and a Child Company or Double LLC For Anonymity. Hopefully I can use a nominee service if Alabama requires a name rather than being able to use the Anonymous LLC name along with a proper registered agent. My question is can my current LLC be continued with my identity deleted or unknown? Or will it be better to start over and dissolve my current LLC which actually bears my name in the company name? If I do dissolve my state’s paperwork ask for the state EIN (which I never had). It was established for managing a rental home however it was never rented since COVD struck and I finally just sold the property. In my state, I do have to report to Alabama. I am afraid a continuance will create a paper trail. I do not believe I will need a Foreign LLC. I am looking at WY and it will be with an attorney’s office. I am looking for an office to use which led me here to your site. I think it may be convenient to be able to run LLCs, DBAs, and Trusts from one office. Wyoming c-Corps require a list of directors or officers when the first annual report comes due. I will likely be s-corp. You guys have some unique offerings here so whether I establish with you directly I know I will be back especially for forms and templates. I will likely have multiple LLCs, DBAs. I model/voiceover. I am an author and I write curriculums, I am planning to open an online boutique to start, I am also a life coach (not marketing as a therapist because I sell package deals which can leave me being viewed as an insurer). My current LLC was done through Legal Zoom however I want to deal with attorney Client Privilege. I am a disabled Veteran as well. Also I want to eventually establish a Self-Directed 401(k) LLC and some form or forms of a trust (a irrevocable self-settled trust, dynasty trust, etc under Domestic Asset Protection.
Hi, there.
I do apologize for the delay in responding to you.
You’ve brought up a lot of concepts, and I can tell you’ve been reading a lot on the Internet, because you’ve mentioned a few things (such as “Double LLC” and “nominee service”) that are very common on the Internet but generally wrong.
Instead of giving you an answer here, I would strongly encourage you to talk with a business attorney somewhere who can advise you and point you in the right directions. We do sell 30-minute business attorney consults, but I don’t have any attorneys licensed in AL. Therefore, all we can do is give you general advice and guidance.
Good luck to you. Larry.
Also have you seen anything about Sports Marketing for the knew NIL (Name, Image, Likeness)? I am raising a professional athlete and I want to represent them. I have not yet been certified as a sports agent but I will be managing through a company. Is there a minimum age for LLC or to obtain an EIN?
There is no minimum age for a LLC to obtain an EIN. In fact, we will obtain FEIN’s for folks who have just formed their LLC.
However, the FEIN is not related to any certifications or licenses you may need to be a “sports agent,” but you should really talk to a business attorney in your home state, because if you’re “raising a professional athlete,” that sounds like you’re a parent and there are most likely exceptions to any certifications / licensing requirements on agents in the parent/child context.
I cannot say for sure, because this will vary from state-to-state. But, please do check in with an attorney who can help advise you in this area.
Good luck. Larry.
Hello, Great Information. I just have one question. If Parent Company A formed in WY or NM owns child company B in SC. Can Parent Company also be the registered agent? or do I need to find a Lawyer or someone for that?
Hi, there.
Most states require an individual to be the Registered Agent, or a properly registered company that the state can narrow down to an individual.
It would be best to find a lawyer or service that you can trust, to be the RA for both companies. We do that, in competition with the “other guys” for $129/year. Learn more. Note that we also provide a free year of RA service when you form an Anonymous LLC with us.
Thank you. Larry.
Thank you. Larry.
Hi Larry,
On your note here, “Parent is a “Member Managed” LLC (no FEIN needed)”
Why is no FEIN needed for the Member Managed LLC?
I thought an FEIN is required for all Member Managed LLCs that are created?
Thanks
You are referring to our recommendation for anonymity in California (CA).
In this specific setup, “parent/child” is a bit misleading. The Management Company (i.e. “parent” in our article) does NOT own the Operating Company (i.e. “child” in our article). The only relationship between these two companies is the fact that the Management Company is the “Manager” for the Operating Company (i.e. CA LLC).
We do NOT want the Management Company to be handling money — at all — otherwise, this could drag the Management Company into CA, requiring it to foreign file, and if that happens, it’s anonymity is destroyed. Therefore, if it’s not handling money, there’s no reason or need for a FEIN.
Hope that clarifies things. Larry.
Thanks Larry – For the California resident scenario, any reason why the Management Company needs to specifically be a Member Managed LLC?
Could it also be technically created as a Manager Managed LLC?
Any differences or repercussions if it’s created as Manager Managed instead of Member Managed?
Example:
Manager Managed LLC (Anonymous Wyoming LLC) manages a Manager Managed California LLC.
Hi, James.
The quick answer is “no,” there’s not reason the management company cannot be “manager managed.” I typically push people to “member managed,” only because of the simplicity. But, “manager managed” always makes sense when the Members want to appoint someone to help run the day-to-day affairs of the company, or a Member wants additional powers not granted to the Members individually without a vote.
There are other reasons for a manager managed, versus member managed, LLC, but those two are the biggies.
I will say, the management company for an anonymous LLC setup in CA, as we are recommending, should not be moving money around nor possess any significant assets. This means, typically, the management company is not very important and shouldn’t really be operating at all.
Larry.