Decide between forming an LLC and a corporation (C-corp or S-corp). Most operators choose LLC for tax efficiency and flexibility. Corporations win for VC fundraising, stock-option compensation, and certain professional-services structures. The snapshot summarizes the decision criteria.
Bootstrap-and-keep, VC-fundraise-and-exit, family/professional services. Each path points to a different default.
Tax efficiency, anonymity, fundraising readiness, ownership flexibility, compliance burden.
LLC, S-corp, or C-corp. Plus a one-line rationale and the matching Anonymousllc.co SKU.
Static snapshot pulled from current state filing fees, statutes, and pricing data. Updates when source data changes.
| Criterion | LLC (default) | S-corp-elected LLC | C-corp |
|---|---|---|---|
| Federal tax | Pass-through (no entity tax) | Pass-through; salary portion is wages | 21% corporate tax + dividend tax (double taxation) |
| Self-employment tax | 15.3% on full net income | Only on salary portion | Owner is W-2 employee - payroll tax on wages only |
| Owner residency | Any (US or non-resident) | US citizens/residents only | Any |
| Owner count | 1-unlimited | 1-100 US-person shareholders | 1-unlimited |
| Stock classes | Member units (flexible) | One class only | Multiple classes (common, preferred) |
| Anonymity (formation state) | Yes in WY, NM, DE, NV | Inherits LLC anonymity | Same as LLC formation rules |
| VC fundraising | Difficult (VCs prefer C-corp) | Same - VCs prefer C-corp | Standard - preferred by VCs |
| Stock-option plans | Profit interests (complex) | ISOs available | ISOs + NSOs available |
| Compliance burden | Lowest | Medium (payroll + Form 1120-S) | Highest (Form 1120 + board minutes) |
| Best for | Operators, bootstrappers, real-estate holders, non-residents | Profitable solo/small ops above $60k net | VC-track tech startups, multi-class equity structures |
S-corp is a tax election, not a separate entity type - an LLC can elect S-corp tax treatment via Form 2553. Most v4 Anonymousllc.co customers form a Wyoming LLC by default and elect S-corp later once income exceeds the break-even threshold. Non-residents cannot elect S-corp.
An LLC is the default because it pairs pass-through taxation with structural flexibility: no entity-level tax, any number of members, any ownership allocation, and member- or manager-managed governance. It fits bootstrappers, real-estate holders, e-commerce sellers, consultants, and content creators. Pass-through means profit lands on the owners' returns once, skipping the corporate layer. The operating agreement sets allocations and management without the board minutes and formalities a corporation requires, which lowers the annual compliance load. Non-residents have no S-corp option, so the LLC is the only flexible vehicle open to them. Anonymousllc.co forms a Wyoming LLC for $397 all-in, and owners add an S-corp election later if income justifies it.
A C-corp wins when you raise venture capital, grant stock options, or plan a stock-for-stock acquisition. Institutional investors require a Delaware C-corp, and incentive stock options and multiple share classes exist only inside a corporation. ISOs, common-and-preferred capital structures, and QSBS eligibility under Section 1202 all attach to C-corp stock, not to LLC membership units. A startup that intends to go public or sell to an acquirer in stock chooses the C-corp to make those mechanics work. The cost of that structure is double taxation, a 21 percent corporate tax plus tax on dividends, and a heavier compliance load. For a bootstrapped operator with no outside equity, that cost buys nothing the LLC lacks.
An S-corp is a tax election, not a separate entity. An LLC keeps its legal form and elects S-corp tax treatment by filing Form 2553, which changes how the IRS taxes the same LLC. Under the election, the owner takes a reasonable salary subject to payroll tax, and the remaining profit passes through free of self-employment tax. That split is where the savings come from once income is high enough to cover the added payroll and Form 1120-S compliance. Most founders form the LLC first for anonymity and flexibility, then add the S-corp election after income crosses the break-even threshold. Non-residents cannot elect S-corp, so the overlay is limited to US citizens and resident aliens.
An LLC is taxed once as a pass-through, with profit flowing to the owners' returns and no entity-level tax. A C-corp is taxed twice: 21 percent at the corporate level, then again on dividends the owners receive. A single-member LLC is a disregarded entity by default, and a multi-member LLC is taxed as a partnership. Neither pays a separate federal income tax. The C-corp's double taxation is the price of the equity features investors want. The LLC owner does pay 15.3 percent self-employment tax on net income, which an S-corp election reduces by taxing only the salary portion. The right answer depends on income level and whether outside investment is on the table.
Venture investors require a Delaware C-corp because its stock mechanics, preferred-share terms, and the Court of Chancery's body of case law match how funds model ownership, protective provisions, and exits. LLC membership units do not. Funds issue preferred stock with liquidation preferences and anti-dilution terms that a C-corp supports directly. Delaware's Chancery Court resolves corporate disputes with predictable, well-developed precedent, which reduces legal risk for a syndicate. Converting an LLC to a C-corp later is possible but can be taxable depending on the LLC's assets and liabilities. A founder certain of a venture path forms the C-corp at the start; everyone else keeps the LLC's flexibility and converts only if needed.
A non-resident can form an LLC or a C-corp but cannot elect S-corp, because S-corp shareholders must be US citizens or resident aliens. The LLC is the flexible, single-taxation option for non-residents. Non-residents form US LLCs without an SSN or visa, and the EIN is obtained by fax with no SSN required. A C-corp is available too, but it introduces the 21 percent corporate tax plus dividend tax that the LLC avoids. Anonymousllc.co forms the LLC for $397 all-in with the EIN, operating agreement, and 4-5 US bank applications, which covers the full setup a non-resident operator needs without opening an S-corp path that the tax code closes to them.
An S-corp election saves self-employment tax on the profit that exceeds a reasonable salary. It pays off once net business income passes roughly $40,000 to $60,000 a year, where the savings outrun the added cost. Below that band, the payroll setup and Form 1120-S preparation, around $1,500 a year, erase the benefit. Above it, taxing only the salary portion for the 15.3 percent rate leaves the rest of the profit exempt from self-employment tax. Because the election attaches to an existing LLC, a founder starts as a default LLC and files Form 2553 in the year income clears the threshold. The LLC vs S-corp calculator models the exact break-even for a given income.
An LLC formed in Wyoming, New Mexico, Delaware, or Nevada keeps members and managers off the public record while only the registered agent is listed. A C-corp is chosen for fundraising, not privacy, and discloses more. Anonymity comes from the formation state's rules, so an S-corp-elected LLC inherits the same privacy as the underlying LLC. Anonymousllc.co forms a Wyoming anonymous LLC for $397 all-in, or a Delaware anonymous LLC for $407 when a Delaware footprint matters. A venture-track C-corp trades privacy for the equity features investors require. A founder who values both privacy and outside equity weighs that trade directly, because the two goals point to different structures.
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