There are strategies where you can form what is called a Friendly LLC (opened and owned by you) in which this LLC becomes your friendly creditor. The friendly creditor will can then put a lien on all of your personal property and real estate and make that property exempt from any future creditor claims or lawsuits.
Limited Liability Company (LLC)
The best business structure for privacy ownership that we have discovered is an LLC. An LLC is a type of hybrid business structure that provides the limited liability features of a corporation with the operational flexibility and tax advantages of a partnership. It has become a popular choice for sole proprietors who are looking to incorporate for protection of assets or to secure additional loans.
LLCs are one of the easiest and least expensive forms of ownership to organize. The Limited Liability Company is now recognized as a business structure in all 50 states and the District of Columbia. LLC owners are called members and can be individuals or other companies, including non-US citizens and non-US residents.
LLC’s profits and losses may pass directly to owners (no double taxation). For many start-up and growing businesses, the LLC may offer the best of all operating structures.
Important Note: It is critical to understand that this is NOT your company and that you only work for it as a representative manager (because the trust owns it). To maintain maximum privacy always conduct yourself with this in mind and never tell anyone… my LLC does this…. Instead say … the company I work for does this…. Confucius say: “The nail that sticks out gets hammered down…”
Purposes of LLC protection
There are various uses for which to use limited liability companies. They have vast applications in business, banking, partnership, and asset protection worlds. When I mention or speak of LLCs, I refer specifically to a legal entity that has all of the following characteristics:
1. No one will know who owns it unless the owner tells them.
2. It will be filed in the state of your choosing—a state that protects privacy.
3. It will be managed by a single member.
4. It will be kept in good standing by maintaining a resident agent.
5. It will not be given an IRS identification number, such as a TIN or an EIN.
6. It will not require an operating agreement nor the keeping of a set of books.
7. It will list a business address that is not in the state where filed.
8. It will be filed by a specific organization skilled in the fields of privacy.
9. The cost/investment is minimal for the level of protection you would get
10. The LLC name will never appear on a state or federal tax return.
What is a UCC-1 Filing and Superior Lien?
A UCC-1 filing is the equivalent of equity stripping in the business arena. The UCC-1 filing is a lien on your business assets or accounts receivable from your finance company. To file UCC-1, you would first form an “Invisible” LLC. Then you would execute a note between your – Invisible- LLC and your business and file a UCC-1 security document with your Secretary of State/Commerce Department of your State. And hallelujah! Your business assets and accounts receivable are encumbered. Any attempt to attach your business assets will have to stand in line after the lien recorded by the -Invisible- LLC you created.
Income Tax Consequences
The IRS treats a one-member LLC as a sole proprietorship for tax purposes; there are no income tax consequences. If Jose Faith happens to use his LLC for a part-time business, he will merely report earnings and expenses on Schedule C and submit it with his 1040 tax return. Repeat: the income—if any—is listed on his personal tax return. Nowhere on the tax form will the name of his LLC appear. As far as the IRS is concerned, Jose’s LLC is invisible.
How are LLCs used for privacy?
The most common uses are to hold title to vehicles and real estate that are owned outright. Occasionally they are also used to own contracts or rent mail boxes or safe deposit boxes.
How can I prove I own the company if my name doesn’t appear anywhere?
If ever there were a case where possession was nine-tenths of the law, possession of the Articles of Organization is it. The LLC is owned by whomever you say owns it—who can prove differently? The State doesn’t know. The organizer doesn’t know. No one will know unless you tell them! No shares are transferred, no owner was originally listed, and there is no annual report that could add additional information.
Basically, having the original Certificate of Organization plus the Articles of Organization in your hand is the same as holding a postal money order that leaves the payee line blank. In fact, if I think back, I cannot ever remember having to even show the original documents at all—to anyone. You would merely show up at a place like the DMV or a real estate title company with a photocopy of the Articles.