Can My LLC Be Owned Anonymously in New York?
Many people ask me whether their name and personal information is kept confidential from the public when they form a business.
Specifically, when someone looks up the company in the relevant state database, what can they find? The answer depends on the state.
State by State Disclosure Requirements
Some states require that LLCs and other business entities disclose to the state and to the public who actually owns the business.
This is not currently a requirement in New York or Delaware, but that may change in New York. On the other hand, I doubt Delaware would ever pass a law like this.
New York LLC Transparency Act
The New York legislature recently passed a new law, which went to Governor Kathy Hochul’s desk, that would have require most LLCs to disclose their true owners.
This law was targeted, from a policy and political perspective, at real estate LLC holding companies, but it will also affect “real” small businesses (meaning all LLCs other than those created solely to own a piece of real estate) including my clients.
I understand the need to know who the landlord is, and so maybe those LLCs need to be opened up to the public, but all the other small businesses, really?
In any event, the law did not pass its original form. Instead, ownership will need to be disclosed to law enforcement but not to the public.
Exodus to Delaware
I believe the New York LLC Transparency Law, if passed in its original form, would cause a massive exodus of small businesses to Delaware. Although it did not pass in its original form — with full public disclosure — that could still happen int he future.
I generally prefer New York small businesses to be formed at home here in New York where the costs are lower than in Delaware and the advantages of Delaware largely irrelevant in the small business context.
However, if in the future I have a client who has a series concern about privacy – and these concerns are definitely legitimate in many cases, often related to safety – then I need to steer them to Delaware despite the added costs.
In addition to safety concerns, there are legitimate business reasons for an LLC owner to want to remain confidential.
Moving to Delaware will be an option for some but not all businesses. If a business moves its registration to Delaware but still operates in New York, the business will need comply with the law in most cases as a “foreign entity” operating in New York.
How to Form an LLC Anonymously
The way many small businesses choose to set up shop anonymously is by having a lawyer, an accountant or a service company file the public papers on their behalf to form the company.
With that approach, if anyone searches the company, for example if you search your landlord, you will probably find only a law firm or accounting firm behind the LLC, not the true owner.
The person who formed the LLC on behalf of the true owner will then transfer the ownership over to the true owner using contracts that are not disclosed to the public, and they don’t need to be in New York as of today.
Bottom Line:
The New York legislature has decided that not only do landlords not deserve privacy – which I don’t necessarily disagree with – but they are also saying that almost every LLC in New York does not deserve privacy, including many of my current and future clients.
Privacy waivers would likely be available, but it’s an added cost and administration burden for companies, and of course there is the risk you will not receive the waiver. In addition, explaining to the Albany bureaucracy why you need a privacy waiver may be an extremely uncomfortable experience for some.
Adam Yohanan represents entrepreneurs, investors, freelancers, startups, small businesses, artists, and entertainers in a wide variety of transactional and regulatory matters, with an emphasis on complex commercial contracts, business formations, corporate governance, M&A, finance, intellectual property, and entertainment law. His office can be reached at 212-859-5041.
This guide is meant for educational and informational purposes only and should not be considered legal advice. It is essential to consult with an attorney or other advisors regarding all legal and other important matters.
