Achieving Financial Privacy

Conducting business in a corporation can sometimes create financial privacy advantages. The corporation is a separate entity for legal purposes. It is required to obtain a Federal Tax Identification number, which is separate from the Social Security number of the owner. Real estate, bank accounts, and other business interests can be legally owned in the name of a corporation. The identity of the shareholders of a corporation is not required in any public filing with the state regarding the incorporation or maintenance of the company. In theory, at least, the names of the shareholders are private and evidence of your ownership is not available for public access. But there are many holes in this general principle. Companies with publicly traded shares are required to disclose the names of principal shareholders in regular reports to the Securities and Exchange Commission and various state regulatory agencies.

The identity of the shareholders of privately held companies must be maintained in a written record in the stock ledger book of the company which is as secure as the procedures implemented by the custodian of the corporate records. In addition, information about the stockholders of a private company may be developed by the database services through voluntary disclosure on credit and insurance applications, business and professional licenses, and other regulatory filings. Corporations must annually file, with the state, the names and addresses of corporate officers and directors. If you are listed as an officer or director, a database search will reveal this connection to your corporation. It doesn’t matter which state you have chosen to incorporate in—Nevada, California, Delaware—every state has the same requirement and the information is publicly available.