Anonymity for LLC Owners
Privacy is an important issue for many people. Some do not want their residence address listed in any public data base. Others want unlisted telephone numbers. Some want their ownership of certain assets or businesses kept a secret. Occasionally, an individual wants to start a “new life” without connections to the past. Thus, there are numerous motivations for privacy of personal information.
Using limited liability companies (LLCs) can help protect privacy in a business or investment setting.
LLCs are now the entity of choice for business and investment. With limited liability for the members (owners), pass-through treatment for income tax purposes, flexibility in design and structure, and the ability to be used in both profit-making as well as non-profit situations, LLCs are well suited to almost any application. Yet there is more.
Members in a Utah LLC can have all of these advantages and still remain anonymous if that is desired.
An LLC can be formed with one of two structures. It can be designed as a member-managed LLC or as a manager-managed LLC.
Where an LLC is member-managed, the members have authority to bind the LLC and the identity of the members must be disclosed to the public. That disclosure is accomplished by listing the name and address of each member in the Articles of Organization that are filed with the Utah Division of Corporations or in the annual reports for the LLC. The name and address of any new member must be listed in an amendment that must also be filed with the Utah Division of Corporations. Further, the annual reports that are filed with the Utah Division of Corporations must also list the identity of the members.
All files for LLCs at the Utah Division of Corporations are accessible to the public. In fact, much of the information in those files can be viewed and retrieved via the Internet.
These are the rules for a member-managed LLC. Thus, there is no anonymity for the members in an LLC that is member-managed.
In contrast, for an LLC that is manager-managed, where the manager is not a member, the identity of the members need not disclosed on any filings with the Utah Division of Corporations. This arrangement preserves anonymity for the members. And the members still have the benefits of the limited liability shield and pass-through taxation. The cost for this anonymity is the cost of forming and maintaining the LLC.
There are some exceptions to be noted. If, in a manager-managed LLC, a manager is also a member, the identity of that person as a manager must be disclosed on filings at the Utah Division of Corporations.
Another exception applies to professional LLCs. For PLLCs–LLCs that practice a profession (medicine, dentistry, law, architecture, engineering, etc.)–there is no anonymity for members or managers. Utah law requires that the names and addresses of both the members and the managers of a PLLC must be disclosed on the public record. The purpose for this exception is to let the public know the identity of individual who practice a profession in LLC form.
To obtain the full benefits of using the LLC form, advice and assistance from a competent lawyer are essential.