Single-Member Anonymous LLC: Privacy and Tax Treatment

What is a single-member LLC?

A single-member LLC has one owner (member). It is the most common LLC structure for solo entrepreneurs, freelancers, real estate investors holding individual properties, and non-resident founders forming their first US entity. There is no functional difference in privacy between a single-member and multi-member anonymous LLC — in Wyoming, New Mexico, Delaware, and Nevada, neither type discloses members on public records.

Default tax treatment: disregarded entity

By default under IRC § 7701, a single-member LLC is treated as a "disregarded entity" for federal tax purposes. This means the IRS ignores the LLC as a separate tax entity — the LLC's income and expenses pass through to the owner's personal tax return.

• US resident owner: Report LLC income on Schedule C of Form 1040
• Non-resident foreign owner: File Form 5472 and possibly Form 1120 (pro-forma). Required under IRC § 6038A. $25,000 penalty for failure to file.
• Self-employment tax: Active business income is subject to self-employment tax (15.3% on first ~$168,600 in 2026)

S-corp election option

A single-member LLC can elect S-corp tax treatment by filing IRS Form 2553. This allows the owner to pay themselves a "reasonable salary" (subject to employment tax) and take remaining profits as distributions (not subject to self-employment tax). This can save significant money for LLCs earning above ~$50,000/year in active income.

S-corp election requires: US person as owner (non-residents cannot elect S-corp), running payroll, and filing Form 1120-S annually. Consult a CPA to determine if the tax savings justify the additional administrative burden.

Charging order protection: state matters

When to add a second member

Some asset protection attorneys recommend adding a second member (even with a small %, like 1-2% to a spouse or trust) to strengthen charging order protection in states where single-member protection is weak. In Wyoming, this is unnecessary — single-member protection is already explicit. Adding a second member changes the default tax treatment from disregarded entity to partnership (Form 1065 filing), which adds complexity. Only do this with attorney guidance.