In the wacky world of business law, limited liability is a precedent-hardened legal status that protects you from lawsuits & damages incurred by a business entity you are a member, owner or shareholder of. It also protects said business entity from lawsuits & damages incurred by other owners or members. Corporations and their shareholders have a form of limited liability which makes up a major backbone of international business law.

However, not all business entities nor their owners enjoy limited liability status. Most small businesses are unregistered or barely registered, a type of business known as a d/b/a or “Doing Business As”. These d/b/a's, as well as most basic partnerships, do not have limited liability status. This means one badly placed legal fiasco can bankrupt everyone involved.

A Limited Liability Corporation (also known as an LLC) is a type of hybrid business entity in the United States (with rough equivalents in many other countries) which goes through a formal incorporation process specifically designating it as an LLC. The specifics of this process vary by state, but they usually want information about your company, what it does, where you do it, how to contact a representative of your company in person if ever necessary, and of course some processing fees. The final result is a business entity that is laid-back like a d/b/a, but enjoys some of the same limited liability benefits & pseudo-personhood that a full-fledged corporation has.

The basic LLC is but one type of Limited Liability available for your operations. There are also many sub-types with different spins on the concept:

Partnerships can have various forms of limited liability status, again depending on locale. In the United States alone, there are multiple flavors of the Limited Partnership (LP), including but not limited to Limited Liability Partnerships (LLP), Limited Liability Limited Partnerships (LLLP), and even Publicly Traded Partnerships (PTP).

Since a Limited Liability Company can have multiple people involved much in the same way as a Partnership (also known as a multi-member LLC), these are rarely started by the first-time business owner. Those who need something more complex than an LLC are usually inclined to upgrade to a Corporation from here (see below). However, some people hold the arcane knowledge necessary to extract some major overhead savings from one of these specialized entities. Consult a lawyer & tax professional if you think you may benefit from having a Limited Partnership.

The members & shareholders of Corporations enjoy a form of limited liability as well. In fact, in other parts of the English-speaking world, Corporations are known as “Limited Companies” because of this benefit.

These types of entities are not to be confused with LLC's. Unlike LLC's, corporations enjoy a form of full personhood, and also have more stringent registration & filing requirements with the state. If your business has to deal with a lot of partners or serious investors, and you need some serious legal servitors to keep them in line, you may want to consider upgrading to a Corporation.

Most states ask for the names of the members of an LLC, but four states do not. While they are not called officially as such, LLC's in New Mexico, Nevada, Delaware and Wyoming are colloquially known as Anonymous LLC's, because the business registration is not required to list all the members.

This concept is not universal. For example, Nevada does actually keep names, the state just stores in a private database somewhere, most likely with terrible security just waiting to be exfiltrated. New Mexico meanwhile collects virtually nothing and has no annual filing requirements.

For the purposes of this tutorial, we will be creating anonymous LLC's in New Mexico, as it is the cheapest & easiest of all states to do this kind of thing from remotely. However, you may want to consider adapting this guide for Wyoming, as they make up for having more expensive filing fees by having no state income tax.