Choosing the Best State for an Anonymous LLC

Choosing the best state for an anonymous LLC structure is probably the most important decision you will make. In this guide we discuss some of the things you need to consider.
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The age of the internet has made locating information online, regarding U.S. companies, complete child play. It really is one of the enduring problems of the modern world that people can literally find out almost anything about you or your various businesses. Subsequently, it pays to choose the Best State for an Anonymous LLC and to ensure your name is not publicly searchable.

Best State for Anonymous LLC
Which State You Choose for an LLC Depends on Your Business Transactions

It’s Not as Simple as Just Choosing Wyoming for an LLC

The internet is awash with information on the best LLC structures for anonymity, but the reality is that they miss the boat on the most important aspect. The first thing you should be considering is where your business actually operates in and from.

Many states have laws that require you to be registered, in their jurisdiction, if most of your business is transacted within their borders. Most of us would need to register an LLC in the state where we are living and/or transacting our business from.

Key Questions to Answer

business LLC state
You Should Answer These Key Critical Questions Before Choosing an LLC State

You really need to consider the following points before choosing a state for your LLC:

  • What state do you mainly transact business in?
  • What state brings most of your customers and revenue?
  • Do I have an office and where is it located?
  • Do I have employees?
  • Does your LLC own Real Estate?
  • Are you operating in a state such as California that has Doing Business (‘DBA’) As rules?

Ultimately, answering most of those questions will give you some perspective on where you could, potentially, be viewed legally as operating from.

Subsequently, the once size fits all approach to anonymous LLCs breaks down when you need to consider where you are legally required to register your LLC. The good news is that, with a bit of forethought on your part, you can certainly structure (Manipulate) your situation to benefit yourself.

Obvious Solutions – Best State for an Anonymous LLC

Case Study #1

John lives in California and operates a drop shipping business based on the internet. He wants to setup an anonymous LLC outside of the state given the taxes and regulatory burdens of California. It’s clear that he just can’t setup an anonymous LLC and give the ‘big finger’ to California as the states DBA rules will likely crush him.

The solution to all of this is for John to setup an operating LLC in California which is owned by a management LLC in New Mexico or Wyoming. The operating company is, obviously, still transacting business in California but it is now owned and managed by an anonymous LLC in another state. This gives you a decent veil of privacy and also reduces his tax burdens.

Case Study #2

Dillon operates his online vitamin business from Texas, and he wants a fully anonymous setup to protect his business information from potential litigants. Most of Dillon’s business is based from and in Texas and he is, therefore, forced into having an operating LLC in the state.

The answer to Dillon’s privacy issue is to create an anonymous Parent LLC that owns the Texas operating LLC, and all funds and control will flow to the parent entity. This LLC can be formed in a state that supports full privacy and, if need be, he can have a nominee director sign his annual returns in Texas.

The Type of Business You Do Matters

real estate LLCs are complicated
Property Related Business Can Have Significant Implications on Anonymity

One of the final points to make is that the type of business you are planning on conducting really does matter. The U.S.  state legal systems are setup in such a way as to strongly take into account the vagaries of ‘transacting’ business.

What this means is that they will strongly consider how you operate your LLC and what business you undertake in an effort to establish where your company should be domiciled. In example, if your LLC owns real estate or other property, and leases that property out, then it is highly likely you will be considered as transacting business in that state.

Subsequently, it matters what you intend to do with your LLC and, simply operating a holding company for assets, is not enough to absolve you of the risk of being seen as ‘doing business’ in a specific state.

Asset Protection – Best State for an Anonymous LLC

My final point relates to, arguably the most important factor of any LLC creation, and that is protecting your assets. The world we live in today is highly litigious and the reality is that anyone can and will file suit against you for almost any reason. It’s unfair but it’s the space we currently inhabit.

Subsequently, adding additional layers of protection, such as an LLC, between yourself and a potential litigant is incredibly important. However, you have to make certain that there is a defined management agreement for each LLC and that they are all run separately and at arm’s length. Otherwise, you may discover that a smart lawyer pierces your corporate veil and attaches an order to your assets.

In fact, if you are seeking the ultimate in asset protection structures then you should consider pairing up your anonymous parent LLC with a trust. This makes it devilishly hard to sue and seek an order from you as the ultimate beneficiary given you no longer, personally own, those assets.

Domestic U.S. trusts are relatively easy to setup and placing the ownership of your parent LLC into one is quite easy. If you are looking for additional protection than an offshore trust, in a place such as the Cook Islands, makes you almost judgment proof. Ultimately, lawyers cringe when they see a Cook Islands trust on the end of the ownership chain because they are almost impossible to get anything out of.

Final Words on Choosing Your LLC’s Jurisdiction

Hopefully, I have made it clear that there is no one size fits all when it comes to picking a state for your LLC to be formed in. You need to consider your personal circumstances and whether you might be, potentially, be seen as transacting in a specific state.

Ultimately, when you consider most of the above factors you are going to end up with a very short list of states that offer, not only privacy, but also have reasonable costs and strong asset protection laws. With this in mind, I can suggest that Wyoming is probably the best U.S. state I have dealt with for LLC formation. They have both ease of filing and a fully anonymous system that you can avail yourself of.

Regardless of the direction you head, we would love to hear your experiences and how you have gotten on with your LLC setup. Feel free to shoot us a message with any questions you might have.

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