In the wild 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, partner or shareholder of. It also protects said business entity (and its compartmentalized assets) from lawsuits & damages incurred by other owners or members, or even yourself. 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. 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.

To make things even more confusing, some states allow LLC's to use “LC” or “Ltd. Co.” as a suffix on their business name to signify Limited Liability status, even though these abbreviations mean Limited Company in other countries. This is the case for the Institute's holding company, Best Point Holdings Ltd. Co., which despite this legally-protected misleading name, is in fact a Limited Liability Company and not a Limited Company.

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, which 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. By the end of the day, it's a business entity that is hard for the general public to dox the owners of.

Since Canadians are insane, they took the concept in the opposite direction, with one called the Unlimited Liability Company. With the ULC, there is no limit to what can be taken from shareholders to repay company debts. Hope your partners are rational sober people who aren't prone to wacky unpredictable behavior, because you're pretty fucked if they aren't!

The only practical use these have in the real world is for tax-evasion, as foreign tax authorities will consider Canadian ULC's to be “pass-through entities”, letting international megacorps blend their losses together and reduce their tax liability.

Limited Liability isn't just a big truck you can throw claims into, but rather a complex series of legal tubes held up by centuries of precedents in English Common Law. You can't just say your company is a Limited Liability Company. You have to earn it, by building a documented legal foundation for your Limited Liability claims to stand on, so that lawyers & magistrates can actually make sense of where exactly your LLC intersects with the real world.

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. It costs a mere fifty dollarydoos to register your LLC with the state, and this registration is good for life with no annual filing requirements. However, you may want to consider adapting this guide for Wyoming, as they make up for having more expensive & recurring filing fees by having no state income tax. Alternatively: Why not both?

First you need to settle on a business name. In New Mexico (and most other states) the name must contain one of the following phrases or abbreviations: “Limited Liability Company”, “LLC”, “L.L.C.”, “LC”, “L.C.”, “Limited Co.” or “Ltd. Co.”. This list can vary from state-to-state, so be sure to check local regulations first if you're doing this outside NM.

Also, make sure your name isn't taken! Use NM's official business portal to do a name search to make sure it is available, or to see examples of how people style their LLC names. Last thing you want is to hardcode a name into your foundation that you can't even use.

Your basic LLC comes in two flavors: Single-member and Multi-member, and they are exactly what they sound like. For your first LLC, you will want to go with a single-member structure, as it will be easier to set up bank accounts and deal with the IRS at the end of the year. When trying to solicit resources for a multi-member LLC, you will be asked to submit more exhaustive documentation proving your Authority within the LLC, than you would with a single-member LLC.

If you decide to start a project that requires more communal oversight, or where you will want to solicit investors without having to issue stocks, you may want to consider a setting it up as a multi-member LLC from the beginning as they are a PITA to convert.

New Mexico is cheap enough that forming two LLC's still costs less than forming a single LLC in most other states. If you have a dozen different creative projects, consider setting them up as a dozen separate LLC's with a mix of management structures, with clearly defined relationships at the points they intersect. This way, they all benefit from legal compartmentalization, in that the failure of one won't take down the other eleven.

This step is optional and you won't need to give it to the state, but it's not a bad idea to just get a whole dedicated Post Office Box set aside for your LLC. Your registered agent service (more on that in Step 5) can handle mail for you, but having a PO box makes things a little easier.

The UPS Store sells mailbox services too, which while more expensive, comes with real street addressing that fools some services which don't take PO boxes.

The purpose statement is a single line of text describing your business, required by the state on all business registrations. There is no “business type” category to fill out on a form. You will have to explain it in your purpose statement. It should be clear & concise.

Keep your purpose statement vague if you want your LLC to be able to adapt over time without having to file amendments. Adding the magical incantation “…and any other lawful activity” to the end is a common & accepted way to future proof your LLC.

Now, most businesses are never expected to turn a profit initially. The government is well aware that it takes money to spend money, so posting a massive loss the first few years won't really arouse any unwanted attention. But if you want your LLC to post losses or break even in perpetuity, you will need to be very clear in your purpose statement that your business is primarily focused on things like “scientific advancement” or “research & development”. There are countless fully-legal LLC's doing this same thing, because it's far simpler/cheaper than trying to run the same operation as a 501c* nonprofit. Plus it's easier for the IRS to audit an LLC than a 501c*, so everyone wins.

Of course, your documented business activities must support what your purpose statement says. If you are a break-even “research & development” LLC, you better have the reciepts, invoices & company memos to back up your claims, in case the government decides to contact you for whatever reason. This is why I like “…and any other lawful activity” in the purpose statement, so nobody can pigeonhole you later. If a year later you wanted to start selling cars or something, “…and any other lawful activity” lets you easily shoehorn it into your R&D-focused LLC. The government does not give a damn if you do this, so long as you pay the taxes you owe on profits after bona-fide expenses.

The State of New Mexico (and every other state) wants a point of contact for your LLC in case they have legal reasons to talk to you, or to serve your LLC a notice/subpoena/etc. Most people just put their own name and address. However, common law in America has allowed for the concept of a Registered Agent, where you can put the Agent and their address down on state registration forms. This is crucial for the so-called “Anonymous LLC”, as anyone who looks up your LLC in a public database is going to be directed to the Agent's address and not your own. For most people, NMRA's $35/yr service is enough here.

Many registered agent services also offer mailbox services & mail scanning, meaning for a little more money you can actually just use their address the same way you would a PO Box.

If you plan on starting up multiple LLC's and are already thinking about how to save money, you have an option: In New Mexico, it's not hard for you to register with the state *as* a registered agent yourself. Your LLC could also be a legally-compartmentalized registered agent service. Might as well just become a notary public at that point too. If you could maintain a cheap office somewhere within New Mexico, you could run your own registered agent service out of it, and bootstrap infinite LLC's…

The process of actually registering your LLC with the state is known by the phrase “Filing your Articles of Organization”. You do this via the New Mexico Secretary of State's Official Business Portal. It costs $50, is good forever, and there are no recurring filing requirements until you start making money. Just create an account, and the option to e-file your Articles of Organization should appear on the “Forms” page.

When providing an address for your LLC, give the registered agent address as the LLC's street address. You don't need to provide your own address or even your own actual name anywhere here, because that's why you're paying for an anonymous registered agent service.

You don't even have to put your own name on the Articles of Organization. Unlike most states, New Mexico does not demand a whole lot of info about your LLC. You can put your registered agent here too. You can also put your name here with the registered agent's address, or even the name of a d/b/a or another LLC.

If you got the PO Box like I said, you should only have to give that as the billing address for the card being used to pay the filing fee //(I am not sure if they take prepaid cards, so if someone finds out please let me know)). Do not put the PO Box directly in the Articles of Incorporation!!! The PO Box is a secret 2nd lever layer of address obfuscation in case someone hacks the Agent or Secretary of State websites and the billing data gets intercepted. Other than this ONE EXCEPTION, all other addresses used in registration should be that of your registered agent.

You will need an EIN (also known as an Employer Identification Number) to open a bank account for your LLC, even if you do not plan on having employees. The EIN is like a social security number for your LLC. It acts as a unique identification tag you can bind LLC assets to, which will further cement your Limited Liability claims in any potential legal setting. Putting the EIN down on things like e-commerce profiles, cloud infrastructure accounts, and even automobile registrations, is basically saying those things are owned by the LLC and not yourself.

You can request an EIN for free from the IRS web site. Just tell them you're requesting one specifically to satisfy federal banking regulations, since that's likely the first thing you're doing with the EIN. Make sure to print the letter it gives you to PDF (and ideally also a hard copy) because it's a PITA to retrieve it later if you forget it. Your bank will likely want to see a copy of the original letter anyways.

Once you have Limited Liability protection, you should immediately start enveloping assets with it. First thing you'll want to do is get a dedicated bank account and debit card for your LLC, as it will make it easier to compartmentalize purchases and writeoffs. While you can still write off LLC expenses made with personal accounts (as the IRS considers its a “pass through entity”), sloppy compartmentalization is still a Bad Habit to have as over time it can blur your Limited Liability claims. Using a dedicated company card to purchase dedicated company assets creates a clear picture for any auditor.

Various types of services online, such as commerce platforms, cloud infrastructure accounts, and domain registrars, oftentimes have a field in account settings for putting your LLC's EIN. This binds the account to the LLC and not your personal name in the records of these companies, again creating a clear boundary for your Limited Liability claims. Make use of these account features when you see them.

Another thing you should consider immediately, is drafting an Operating Agreement for your LLC. This is not required to register the LLC in New Mexico and several other states, but having one will make it easier to secure resources, as the Operating Agreement will be the only thing truly proving your Authority to make Official Business Decisions in your “anonymous” LLC. It will also protect you in court, as anything not defined in your Operating Agreement will fall back on default New Mexico laws, which may not be what you want.

The Operating Agreement is where you can also define all the assets you first transfer into the LLC. Land, vehicles, virtual assets, can all be listed as an appendix table in your Operating Agreement along with everything else, meaning your Operating Agreement doubles as a bill-of-sale that authoritatively extends the Limited Liability protection to those assets.

If you have multiple LLC's sharing the same asset, you will need to define the relationship of those LLC's to each other, either in the Operating Agreement itself or an addendum of sorts. These sorts of things need to be crystal clear in writing so that Limited Liability boundaries between the LLC's actually hold up in a court setting. Be careful!