If you are interested in preserving and protecting your privacy as a small business owner, and you are the only employee, you may consider structuring your business as a single-member limited liability company (“SMLLC”). As a sole business owner of a business, your privacy may be a concern to you.
The Internal Revenue Service defines a Single-Member LLC as a Limited Liability Company created by state statute. Depending on elections made by the LLC and the number of members, the IRS will treat an LLC either as a corporation, partnership, or as part of the owner’s tax return.
While a single-member LLC seems very similar to a sole proprietorship, a sole proprietorship is a distinct and separate business in name only. In a sole proprietorship, a person is not legally split financially from the owner, as is the case in a single-member LLC. The legal and tax benefits of a single-member LLC are also completely different than a sole proprietorship.
Creating a Single-Member LLC
Due to the more complex nature of a single-member LLC, there is more paperwork to submit including the Articles of Organization, Operating Agreement, and Articles of Incorporation. All of these documents will need to be submitted along with fees for your Secretary of State.
As a new business owner, you may be working out of your home, and wish to keep your anonymity. There are several ways you can protect your privacy and separate your personal and professional life, and retain your confidentiality.
- Choice of Forum
Some states do not require you to report the members to the state. Consider forming your entity in a forum that allow for privacy. Some states allow you to publicly disclose a manager, without disclosing the members.
- Registered Agent
Every state has a legal requirement that a business must have a physical mailing address. However, you may choose to pay for a registered agent to receive your mail, or accept legal documents on your behalf.
- Business and Mailing Address
While every business needs a mailing address, you may consider purchasing a P.O.Box instead of using your home address. Another option is to rent a virtual office space or use a mailbox at a coworking space.
- EIN Number
Every business must have an Employer Identification Number (EIN) that is established through the Internal Revenue Service (IRS). The IRS instructions indicate that you will need to use the mailing address of your company for your EIN, which is usually your place of business, and not a registered agent or P.O. Box. However, in some cases, you may be able to use a virtual office address.
Reach Out to an Attorney for Help
We are excited that you are starting a new business! Making decisions regarding how to set up your company legally can be challenging and involve complex legal structures. Additionally, if you are interested in preserving your privacy, you can take several legal steps in order to do so. However, with the number of legal decisions you need to make, visiting with an experienced business attorney can help you sort through the complexity and determine what business structure is best for your privacy needs.
At the office of Julianne Frank, one of our experienced Jupiter business attorneys would be happy to visit with you regarding your new business, and which type of business structure would be right to protect your privacy. If you are interested in learning more about what options are available, please contact us at (561) 220-2528 today.