Happy Sunday!

If you are like me and follow a bunch of CPAs and attorneys on TikTok, then you can’t go a video or two without someone making a video about the extinction of anonymous LLCs in 2024.

I dug into it a little and thought I’d clear the air (and, who doesn’t like to learn a little about anonymous LLCs, right? It sounds very mysterious to me too…).

First things first, let’s talk about why people create anonymous LLCs:

Extreme paranoia;
Protection from harassment (if your business is controversial);
Privacy (you are Scrooge McDuck rich);
You love unnecessary expense and paperwork; and
You think it’s cool to tell people you have one (insert irony here).

Second, how to create one.

You will need to create your LLC in one of the states that allows for anonymous LLCs (WY, NV, NM, and DE).

What these states allow you to do is, when creating your LLC, opt-out of providing the name of the person who owns the LLC. You can use a law firm, a nominee, or pretty much anyone you want to be listed as the point of contact for the LLC.

If you’re doing business in another state, though, it is likely that you are going to have to register that LLC with the state in which you are doing business… and when you do that usually that state requires you to disclose the owner of the LLC.

There is another way to create anonymity with an LLC, which I’ll talk about in the next week’s email (a perfect Christmas eve topic of discussion!).

Up until 2024 that would give you a relatively anonymous LLC.

And now that is all going away.

Kind of.

Here’s what happening.

The federal government decided they were tired of getting the run around from thousands and thousand of LLCs that they were unable to identify the owner of.

Many of these types of LLC are used for nefarious purposes – google anonymous LLC and money laundering for some ideas.

Someone inside finally realized “hey wait, we’re the government – let’s make a law to figure out who owns these LLCs.”

So they did.

And starting January 2024, whenever a new LLC is created, the owners of that LLC are required to disclose their identities to the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).

All current LLC owners have until the end of 2024 to file their paperwork.

If you don’t follow the rules then you have to pay the government fines and you could go to jail.

Make sense?

Perfect.

Now, here’s why I put “kind of” in the subject line.

First, there are ways to create anonymous LLCs and still meet this requirement (tune in next week!).

Second, while anonymity won’t be absolute when you comply with this law, you will still have your identity concealed from anyone that is not the United States government.

So it’s not really that bad.

That’s my hot take on the loss of anonymous LLCs in 2024.

Feel free to ignore the doom and gloom that is coming to your nearest social media platform.

Have a great week!

Cheers,

Christopher Small
CMS Law Firm LLC

PS – don’t keep this estate planning stuff to yourself – you know it’s important and we LOVE referrals!

PPS – note for CLIENTS – our office will be CLOSED December 25-January 1. If you are planning on waiting until the end of the year to get started or get done, don’t wait too much longer!