S-corp is a tax election, not an entity type. You can have both — an anonymous LLC taxed as an S-corp.
By Alif Al Razi, Anonymousllc.co
| Dimension | Anonymous LLC (default) | S-Corp election |
|---|---|---|
| Entity type | LLC | LLC with Form 2553 election |
| Tax treatment | Disregarded (single) / Partnership (multi) | Corporation (Form 1120-S) |
| Self-employment tax | Applies to all active income | Only on reasonable salary (saves on remainder) |
| Anonymity | Anonymous in 4 states | Same LLC anonymity preserved |
| Asset protection | Charging order protection | Same (entity is still an LLC) |
| Administrative burden | Minimal (Schedule C or 1065) | Higher (payroll, 1120-S, reasonable salary) |
| Owner requirements | No restrictions | US person only, max 100 shareholders, one class of stock |
| Best for | Simplicity, non-residents, passive income | Active business > $50K/yr profit, US residents |
A default anonymous LLC (disregarded entity for single-member, partnership for multi-member) is the simplest structure. All income passes through to the owner's personal return. Self-employment tax (15.3%) applies to active business income. No payroll required. No restrictions on who can be a member — non-residents included. This is right for passive income, early-stage businesses, and non-resident founders.
An S-Corp election (Form 2553) allows the LLC to be taxed as a corporation while maintaining pass-through treatment. The key benefit: you pay yourself a 'reasonable salary' (subject to employment tax) and take remaining profits as distributions (not subject to self-employment tax). At $100K profit, this can save $5,000-10,000/year in SE tax. The tradeoff: payroll administration, quarterly payroll taxes, and an additional tax return (Form 1120-S).
An anonymous LLC taxed as S-corp is the best of both worlds for profitable active US businesses: anonymity on state records + SE tax savings. But only worth it above ~$50K annual profit and only available to US persons. Non-residents and passive-income earners should stick with default LLC treatment.
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