Understanding the privacy of business ownership

Perhaps you want the privacy of your proprietary interest in your business. This can be for a number of different reasons, including avoiding ungrounded lawsuits. Maybe somebody you know in the property of a company sued last month and you believe that you can avoid the same fate if people can not find what you own. There are a number of services for incorporating the Internet that advertise certain privacy benefits, such as the protection of property, by organizing your business in accordance with the laws of a particular country. Nevada and Wyoming (and even New Mexico and several others) are usually countries that are sold as "shelters for privacy and property protection". These countries do not require disclosure of the identity of the shareholders of a corporation or members of LLC who manage managers in the necessary corporate filings (public records). Usually, this "privacy" of the state only requires that directors (sometimes only 1) and corporation officers, or LLC managers, be published on the Statute (or Statute) and all annual reports.

But there are many myths regarding privacy and property protection. Many new entrepreneurs lure themselves into believing what is often a fraudulent fraud. I will try to eliminate several of these myths. The conclusion is that privacy does not protect your property by itself, but is only useful. The only major benefit of protecting the privacy of the state is that it can help prevent non-serious litigation. Preventing Joe's average to find out which companies you can own by searching public records is a good thing. This can save many unfounded claims. If it takes more time for someone to understand who the owners are, this is obviously useful. The plaintiff will have to spend more money, and most of the lawsuits are a simple pure economy game. Therefore, privacy can sometimes be very expensive for potential prosecutors to find your property.

Guaranteed protection of property simply through the ownership of property is basically a myth. In particular, whether your business is always in accordance with the laws of Nevada or Wyoming, or use candidates or even shares on the provider, these are common questions. The short answer is that Nevada, Wyoming (and several other states) offer privacy protection, but it is not a guarantee that you will protect your property or avoid any kind of liability for your behavior.

Myth # 1: You can maintain full privacy by organizing in Nevada or Wyoming (or elsewhere)

The stated benefits of Nevada or Wyoming for privacy include:

  • Privacy by shareholders without requiring their names to become part of the public corporate records. Nevada or Wyoming do not require shareholders or LLC members to be disclosed in corporate filings, only directors, officers, and LLC managers must be posted – I will discuss this later in this article;
  • It allows the use of nominee shareholders, directors and employees of corporations and nominee members and managers of LLCs;
  • Nevada and Wyoming do not share their data with the Inland Revenue Service and is one of several states that do not have a tax break arrangement arrangement (33 countries have an "IRS Information Exchange Agreement"). But, just because Nevada does not share information with I.R.S. does not mean that your information will remain private. You will have to submit I.R.S. with the name and number of the social security of the person responsible for all tax related issues with the company in order to obtain EIN. Also, the company will be required to prepare a tax return (information reports for S-Corp and majority of LLCs), on which the names and social security numbers of the owner will be given. So, I.R.S. will end up with this information, regardless.

But you can lose this privacy in different ways. Business owners may be required to disclose their identity in the following cases: 1) registration for performing activities in their home country; 2) issuing shares; 3) obtaining the necessary business permits (required by the State of Nevada for most of the activities and charging an additional fee for obtaining); 4) opening a bank account; 5) you are an employee or sole trader in a corporation or LLC; or 6) the conclusion of other contracts or agreements where it is signed individually, such as the conclusion of loans. Nevada now also requires a company taxpayer identification number and a personal guarantee from you on a state business license. So, it may not make sense for an average business to be organized in Nevada or Wyoming exclusively to use privacy for these reasons.

Also, keep in mind, you may need to personally guarantee any debt in the name of your business and you will probably conclude contracts in the name of your business. This means giving your name and signatures on certain documents. You will also need to provide a specific person along with their social security number to the IRS as a taxable person responsible for receiving your FEIN for your business. These are all ways in which you can discover your identity. The average Internet business owner will manage his business and there is really no way to avoid these things.

Of course, if you do not take an active role in the business or sign such contracts or warranties, this concern may not apply. Also, using nominated (explained in more detail below) or even corporations on the shelf will generally allow you to avoid disclosing your identity in public (corporate) records. Some corporations on shelves can even be bought with established bank accounts, credit histories and tax returns submitted to the Internal Revenue Service.

Myth # 2: Privacy protects your property

The privacy provided to those who organize in Nevada, Wyoming or any other country with similar privacy features will simply not protect your interest in a corporation or LLC from your lender. For example, in accordance with Nevada Civil Code NRS 21.080, all real and personal property of the judgment debtor (not otherwise exempted by law) is subject to enforcement, including "actions and interests in any corporation or company". If the creditor gets judgment against you, your interest in a non-volatile or wyoming corporation / LLC is the subject of an attachment in order to indebt. You can ignore the court order for testifying about your property (or refuse to answer questions after appearing) and face a prison sentence for not respecting the court or committing a perjury by lying about the extent of your property. Obviously, it's not an attractive choice and why the notion of privacy does not protect your property. Do not be fooled by sites that tell you differently.

Myth # 3: The use of nominated strategies for bullet proofing

Many online services cite the use of nominated as a method of impenetrable privacy and property protection. The Nevada and Wyoming law, for example, allows the use of designated directors and officers and managers of LLC and named shareholders and members. The theory is that you can use a third party to hide your identity from the owner and corporate officer or managers. Then, you can keep control of the entity using a proxy or other corporate control instrument or LLC over the named one. You should avoid using the candidate or at least understand that there are holes in this strategy.

While you will get a certain amount of privacy from appointing officers, shareholders, directors, etc. This privacy will be lost when a court order is submitted to the candidate and is asked to provide contact information for the company's owners. The candidate will then be legally obligated to provide this information and your privacy has disappeared. The Civil Procedure Act in Nevada clearly states that a failure to enforce a court order will be punished for contempt of court. The law does not leave room for discretion, unless the documents that are published are privileged. I think it would be hard to find candidates who will want to spend some time in jail for a small fee that you pay for services.

But some services there offer the use of a lawyer to act as an intermediary between you and the establishment service. This lawyer can then refer to the privilege of a lawyer and client, adding a privacy layer at any time when there is a question about your identity. Direct engagement with the incorporation service does not create such a privilege. However, in some cases, the court may order a lawyer to disclose your identity in case of fraud or criminal behavior. This practice is a measure of privacy.

Myth # 4: Using stock on a carrier provides property protection

There are many websites for the protection and incorporation of assets that state the use of shares in the issuer in the state of Nevada and elsewhere. The issuer's actions are now illegal under the laws of the state of Nevada since 2007. Nevertheless, the stockholder strategy does not prevent creditors from refunding their shares if a judgment is brought against you. There are too many holes in the use of shares on the provider as a way to maintain privacy and protect your assets. This "strategy" creates all kinds of false transfer issues, as well as possible revenue and / or tax limits. There is really no need to go into some other details except to say You should avoid it services / websites that advertise the use of shares on the donor as a means of protecting property. Also, for most small businesses, the most negative aspect of the issuer's shares is the S-choice's inability to limit the number and type of shareholders. Most countries do not allow us to mention shares on the dealer.

Actually understand privacy

If you feel strongly about privacy, at least on the surface, then you need to understand what that really means. In fact, privacy in fact lies in the fact that every State Brief for Submitting Annual Reports on Corporate Briefs is submitted. If you are really worried, you can use a state such as Nevada or Wyoming, which does not allow the disclosure of members to an LLC or Managed Managers, or an initial or annual corporate filing. Nevada's privacy protection protects members and shareholders from publishing in corporate filings, but this privacy does not apply to certain officers, directors, and, in the case of LLC, a manager. Nevada requires the founder or organizer to appoint by name of at least one initial director in a corporation article or, in the case of LLC, at least one member or manager in the organization's articles. In both cases, articles are a public record, and anyone can request copies by paying a small fee.

Nevada, like other states, requires that each corporation and LLC submit an "Annual List of Officers and Directors" every year. This requires the publication of full names at least of the officers and the manager of the corporation, as well as the director of the LLC. This information is then published on the State of the State of Nevada website, which is a publicly searchable database and is easy for anyone to discover who is operating a corporation or LLC. Most countries will allow you to appoint a director of your LLC and appoint directors of the corporation and only provide information about these persons on organizational documents.

But, depending on the state law, shareholders or LLC members are required to be listed on annual reports. This is where you can encounter a privacy issue if you are worried. Regardless of state laws, it is very difficult for a small current business to maintain the privacy of all owners. It can also be an administrative and financial burden for the establishment and maintenance of a corporation or LLC in another jurisdiction. The fees payable to the state and these types of candidates will be accumulated. But privacy is still a matter of avoiding frivolous lawsuits, as I mentioned. Just understand the limitations and myths.

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