1. How Are Sales Amounts Calculated in a Non-Disclosure State?
2. What Does This Have to Do With an LLC?
3. What You Need to Know About Anonymous LLCs
4. Do You Need a Non-Disclosure Agreement?

LLC non-disclosure states are those that do not provide the public access to data on the ownership of a company. This is similar to states that don't disclose the sale prices of real estate. In most jurisdictions, property transaction records are available for anyone to view. However, in 14 states, the public can only see property information and ownership changes with loan amounts and mortgage transfer taxes as opposed to seeing the actual sales price.

How Are Sales Amounts Calculated in a Non-Disclosure State?

Entities in non-disclosure states can estimate the sale price of a property using the mortgage value in a formula based on millions of sales and the ratio between the purchase price and the mortgage amount. This works only on sales, though, and not refinances. The formula only yields estimates rather than concrete numbers. On average, they are close to accurate, but any given property may be the exception. As time goes on, these calculations may have to change.

If you have the loan amount for a property, you can multiply it by a particular value depending on the mortgage type.

  • For a Federal Housing Administration (FHA) loan, the multiplier is 1.01. The FHA is an agency of the federal government that insures the first mortgage on a property. This lets the lender loan a higher percentage of the sales price.
  • For a Veteran's Administration (VA) housing loan, multiply by 0.98. These loans are backed by the federal government so that buyers don't need much of a down payment.
  • Conventional loans are multiplied by 1.33. They are not backed by any government program.

As an example, if you know that the mortgage was $100,000 and that it was purchased with an FHA loan, then you multiply by 1.01 to get an estimated sales price of $101,000.

What Does This Have to Do With an LLC?

An LLC (limited liability company) is a business structure that exists in all 50 states. This type of company is flexible, inexpensive to operate, and easy to maintain. Regulations vary some by state, so you should check the requirements in the state where you set up your business. However, all states require a registered agent and an organizer to be listed on the LLC application. Most states also require managers or members to be listed as well. The few states that don't require the disclosure of this ownership information are said to allow anonymous LLCs, private LLCs, or confidential LLCs.

Legally speaking, there are no differences between these types of LLCs and regular LLCs. The secretaries of state in most jurisdictions do not advertise that they offer anonymous LLCs. In fact, most are unfamiliar with the language. The fact that this ownership information is not public record does not mean immunity from prosecution for fraud. The state attorneys general will pursue investigations aggressively, regardless of the LLC's anonymous nature.

What You Need to Know About Anonymous LLCs

  • Tax Avoidance: Anonymity does not allow the LLC to avoid filing or paying taxes. These businesses are taxed the same as any other LLC and enjoy the same advantages.
  • Traceability: While anonymity does make it harder for any member of the general public to learn who owns what company, the status cannot protect the owner from misbehavior. Prosecution can pierce the corporate veil when necessary.
  • Preservation of Privacy: This business structure does help safeguard your privacy but should not be viewed as shady or unethical. It can help victims of abuse or harassment avoid being found, and it can keep tenants from bypassing property managers and bring problems straight to the landowner.

Do You Need a Non-Disclosure Agreement?

Whether or not you need a non-disclosure agreement (NDA) depends on the kind of business you have. If you regularly use confidential information or trade secrets, it might be wise to require members and employees to sign something to keep that information safe. No state requires the LLC to use an NDA. A few do require an operating agreement to govern the operations of the LLC, and that document might include an NDA.

A non-disclosure agreement is generally used to protect client identity, financial information, or secret formulas. They're used to protect a company's ability to compete in the market. Those employed by the business or otherwise involved may need to have access to this information, so an NDA becomes necessary.

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