Pros and Cons of an Anonymous LLC – Does It Work in 2024?

Last Updated on September 13, 2024 by Dr. Gabriel O’Neill, Esq.

Starting a business has become simpler with the help of various resources and technological advancements. However, this also means that company records are more accessible to anyone with an internet connection. As a result, many entrepreneurs are choosing anonymous business structures, like anonymous LLCs, to protect their privacy.

If you’re a business owner concerned about privacy, registering an anonymous LLC might be just what you need. It allows you to keep your ownership details private, so you won’t have to worry about others discovering your connection to the business.

A key step in forming an anonymous LLC is hiring a registered agent. The right registration service can provide complete privacy and help you run your business discreetly. Northwest Registered Agent, for example, offers LLC formation services for just $39 and is known for its focus on privacy.

This article will cover the pros and cons of an anonymous LLC to help you decide if it’s the best option for your business.

What Are the Pros and Cons of an Anonymous LLC?

In an anonymous LLC, the names of members and owners aren’t published publicly. All identities remain hidden and protected by the state in which the LLC is registered. Currently, four US states allow anonymous LLCs: Delaware, New Mexico, Nevada, and Wyoming. These anonymous LLC states offer complete protection to private businesses.

The process involved in registering an anonymous LLC includes coming up with a business name, finding a registered agent, and filing all important documents with your chosen state. A good registered agent will help you throughout the registration process and will make sure that everything is done confidentially. Register your anonymous LLC for $39 only.

So, should you create an anonymous LLC? Here are all the anonymous LLC pros and cons that can assist in your final decision.

Why You Should Create an Anonymous LLC

Listed below are several reasons why an anonymous LLC might be just what you are looking for when it comes to keeping everything private. 

1. Protection of One’s Privacy

A major advantage of creating an LLC that’s completely private is that all of your sensitive information remains hidden from the public. This includes your personal details and those related to your business, such as business assets, property investments, and other private information.

2. Avoiding Lawsuits

As a business owner, you don’t want to be subjected to any form of lawsuit that could potentially harm your business. Having a private business allows you to keep both your identity and information related to your business out of the official ownership records of an LLC. This way, you avoid all sorts of litigation.  

3. Reduced Harassment Risk

Since details of members of an anonymous LLC are not available publicly, this greatly reduces any form of harassment risk to both the members and the business. Your business information stays protected while keeping all affairs out of the public eye. 

4. Your Assets Stay Protected

When you create a private business, you get a corporate veil of protection. This ensures that all of your business assets are protected from various threats, like personal creditors. These are people you owe money to, such as family and friends.

5. Enjoy the Benefits of a Regular LLC

Creating an anonymous LLC allows you to enjoy all the benefits that come with a regular LLC. This includes things like tax advantages, the ability to survive, limited liability protection, and the flexibility to operate your business however you want.

6. Tax Benefits

As an LLC owner with a private business, you enjoy numerous tax advantages. For instance, since you are the owner, your income is not taken into consideration when you file your taxes. This greatly reduces tax liability. 

7. A Flexible Business

You can construct your business in whichever way you prefer. This allows you to have the ability to customize your LLC according to your requirements. Having a flexible business means you can alter it based on how the current market of your chosen industry is performing.

8. Limited Liability Protection

Similar to a regular LLC, you get limited liability protection, as mentioned earlier. This means that all of your assets remain protected from your business liabilities. For example, if your business were to fail for whatever reason, you will not be responsible for the company’s debt liabilities and financial losses.

Moreover, in the case of an anonymous LLC, the actual owner of the business won’t be disclosed if the business fails. 

Why You Shouldn’t Create an Anonymous LLC

Despite all the benefits that come with an anonymous LLC, there are also some downsides to this type of business structure.

1. Not Having Complete Anonymity

You cannot achieve complete anonymity despite being registered as a private business and having your details off the public records. There are certain institutions and people who will still have your information. 

This includes the IRS, incorporating services, banks, governmental institutions, suppliers, employees, clients, partners, vendors, and so on. Some of these people or entities can use your information for public purposes if need be.

2. Required to Pay Taxes

A private LLC is still a business, and every business is required to pay some form of taxes. This includes franchise tax or self-employment tax.

3. Risk of Lawsuits

Private businesses can still be subjected to some form of a lawsuit. This could disclose the identities of the owners, partners, clients, and related third parties that might be doing business with the LLC. This also includes registered agents and law firms.

Moreover, any of these entities might have to legally act for your anonymous LLC if they are called into court due to a subpoena.  

4. Federal Employer Identification Number (FEIN)

You need to register for a FEIN to form your anonymous LLC. This is an important step, and it’s needed to open your business bank account. However, this means that you will need to file your application with the IRS on their website, resulting in disclosing your identity.

5. Drawbacks of Limited Liability

You do have some form of protection from personal liability as the owner of a private LLC, however, it’s not definite. The limited liability protection could potentially get weakened if you are being irresponsible with your actions.

6. Complicated and Costly

Setting up an anonymous LLC is a complicated process and maintenance of the business tends to be on the more expensive side. Plus, your anonymous company will be required to follow all rules and regulations on a state and federal level. This can be quite time-consuming and tough.

7. Hard to Dissolve

Dissolving an anonymous LLC can take a while. All members might be required to go through additional steps to dissolve it. This entire process can take a long time.

8. Difficulty Transferring Interests

Members of an anonymous LLC won’t be able to transfer their interest from the business to a different party. This is because the other party won’t know anything about the original members unless they get approval beforehand. 

Difference Between a Standard LLC and an Anonymous LLC

An anonymous LLC is pretty much the same as a regular LLC, except with one major difference. The identities of all members and owners aren’t available to the public. All anonymous LLC states that you register your business in are required to protect the personal information of all its shareholders.

Owners of a private LLC also have the advantage of keeping their business life separate from their private one. Plus, the public won’t be able to link to the items you purchase anonymously.

Looking at it from a legal perspective, there isn’t much difference when it comes to registering a regular LLC or an anonymous one. A limited liability company tends to be flexible, which means as a business owner, you enjoy several benefits, like tax advantages. Plus, forming an LLC is a lot simpler as compared to forming a corporation.

Similar to your standard limited liability company, an anonymous LLC offers all the benefits that come with your regular limited liability company. 

When it comes to registering an LLC, regular or private, the right registration service can make all the difference. If you are looking to keep all of your personal and business information private, then Northwest Registered Agent can help you achieve that goal. They greatly value the privacy of their clients. You can get a great deal for $39 only. 

Pros and Cons of an Anonymous LLC – Conclusion

Setting up an anonymous LLC in Minnesota is a smart strategy to safeguard your privacy and assets. By following the steps in this guide, you can maintain confidentiality while staying compliant with state laws. Keep in mind that anonymity does not exempt you from legal responsibilities, so consulting a lawyer before establishing an LLC is a good idea. 

Ensure accurate record-keeping and preserve the integrity of your anonymity by steering clear of illegal activities. With careful planning and adherence to the law, you can enjoy the benefits of anonymity while successfully running your business in Minnesota.

Are you ready to register your anonymous LLC? Visit Northwest Registered Agent and get a great deal for $39 only.