Introduction to Privacy and Business Ownership
Many first-time business owners worry about the privacy of their personal information. For a savvy entrepreneur, running a business does not have to mean disclosing everything about your life to the public. Instead, use a variety of legal, financial, and common sense strategies to protect your privacy.
First, obtain tax identification numbers for your business, register it with the state and city in which you operate, and maintain a business address and telephone number separate from your home address and cell phone number. You also may need to register fictitious business names. While sending the government your information may not appear to protect your privacy, being officially registered can protect you from personal liability in some cases. Also, people may be less likely to seek out your personal information if your business information is public information.
If your business has silent partners or if you would rather not have the public know the identity of everyone who owns the company, consider forming your business as a limited liability company. California limited liability companies do not have to disclose ownership information to the public if they are not member-managed. Ownership interests must be included on federal and state tax returns, but those documents are not public. Further, an LLC can be owned by another LLC or by another corporate entity, meaning that if its ownership is disclosed, it will not necessarily be obvious who funded the company.
On the financial side, open a bank account specifically for your business and separate it from your personal accounts. Many business owners owe fiduciary duties to their investors relating to management of the company’s money, so keeping track of cash flow in the business is imperative. A separate bank account helps prevent business money from being used for personal expenses, and protects your personal financial information from your business partners and investors.
Further protect your personal information by setting up common sense safeguards, such as data encryption, firewalls, and virus scanners on your business computers. Do not share passwords to your personal accounts with people at your business, and do not use those personal accounts for business needs. Maintain a separation between business and personal affairs to protect privacy.
Personal privacy in operating a business takes some forethought by business owners. Plan ahead by consulting an experienced business attorney for your legal privacy protection needs. Michael Leonard, Esq., of San Diego Corporate Law, named a “Rising Star” for 2017 by SuperLawyers, can help set up business entities and evaluate your business’s structure. To schedule a consultation, e-mail San Diego Corporate Law or call Mr. Leonard at (858) 483-9200.