Complete an S Corp Election in 90 Seconds
Filing an S corp election may sound daunting, but if you follow the instructions below, I truly believe the Form 2553, Election by a Small Business Corporation, can be completed by anyone in 90 seconds or less. First, to be eligible for an S corp election your business must meet the following criteria:
S Corp Election Prerequisites
- Incorporate as an LLC or C corporation: Your business cannot start as an S corp. You initially incorporate as an LLC or C corp and then later elect to be taxed as an S corp.
- Shareholders must be U.S. individuals: Shareholders generally can’t be an entity (such as a partnership or corporation) or non-resident.
- 100 or fewer shareholders: An S corp can’t have more than 100 shareholders.
- Timely filed: An S corp election must be filed within two and a half months from the beginning of the tax year the election is to take effect. S corp elections can still be filed after this deadline (with late election relief), however, we’ll cover this method in a different post.Â
Documents Required for S Corp Election Paperwork
- Form SS-4 from the IRS: This is the letter that shows your employer identification number received from the IRS.
- LLC or C Corp Articles of Incorporation: This is the document from the state you incorporated in showing your business name and date of incorporation.
Lets Get Started – Listed below are instructions to complete a standard (filed timely, without late election relief) S corp election in 90 seconds or less.
- Â Download the Form 2553, Election by a Small Business Corporation, at the following link – Click Here.
- On the “Name” line, write your business’ legal name. This should be the same name on the initial EIN letter received. You do not receive a new “S corp name.”
- On the “Employer identification number” line, write your 9-digit EIN received from the IRS.
- On the “Number, street, and suite no.” line, write the number and street portion of your business address (that you would like to receive any mail or notices from the IRS).Â
- On the “Date incorporated” line, write the date your LLC or C corporation was incorporated.
- On the “City, state, country, and zip” line, write your city, state, and zip for the business address mentioned above.
- On the “State of incorporation” line, write the state abbreviation for the state your LLC or C corporation was incorporated in.
- Line D is usually left blank unless you’ve changed business names or addresses.
- Line E should either be January 1 of the year you initially want to be taxed as an S corp or the date of incorporation (same as number 5 above) if this is your first year of business.Â
- On Line F, for a standard election, check “Calendar year”. This means the fiscal year will be from January 1 through December 31st.
- Line G can likely be left blank (unless you have more than 100 shareholders).
- On Line H, add the business representative’s (officer or owner that should receive communication from the IRS) full name and telephone number.
- Line I is left blank.
- At the top of page 2, add your business’ legal name and EIN (same as the one listed at the top of page 1).
- In section J, add the name and address of each partner/shareholder.
- In section L, add the percentage of ownership each shareholder will have and the date acquired (usually the same as the date of incorporation in step 5 above).
- In section M, add each shareholder’s social security number.
- For section N, in a standard election, this is “12/31”.
- At the top of page 3 and 4 add your business’ legal name and EIN (same as step 14).
- The rest of the form is left blank.
- Once complete, there are a few places to sign and date.
- At the bottom of page 1, the officer listed in line H, should sign, date, and add their title. We have seen that the IRS doesn’t like the title “owner” or “shareholder” or “partner” so we recommend adding a company title such as “president”, “CEO”, or “COO”. It is also important this is hand signed. The IRS will reject “docu-signy” looking signatures.
- In section K on page 2, each partner should sign and date. Again, it’s important to hand-sign.
24. Once complete, mail or fax (we recommend faxing) the signed form to the address or fax number listed for your principal state of business. At this point, you are all set. It usually takes 2-3 months to be approved by the IRS. If you haven’t heard back by this time, I recommend calling the IRS and getting a status update. They may ask you to mail or fax the form back in.
You can find an example of a completed Form 2553, S corp election, for a single owner business at the following link – Click Here.Â
You can find an example of a completed Form 2553, S corp election, for a two-partner business at the following link – Click Here.
Want to Know if an S Corporation is Right for Your Business?
Learn More
Check out our other posts and subscribe to our YouTube page for more information.
About the Author
Brett Rosenstein
Founder of S Corp Advantages
Certified Public Accountant
Brett is the founder and president of S Corp Advantages where he specializes in S corporations. He helps business owners understand if an S corporation election is right for their business. He also keeps current S corps in compliance with IRS regulations.
Brett received a Bachelor of Science in Business Administration from The Ohio State University. He is also a Certified Public Accountant.
When Brett is not working, he is running, biking, spending time with his wife and daughter, or trying new pizza places around Chicago.
Work with Us
S Corp Tax Filings
pricing starts at-
1 State Filing Included
-
E-Filing
-
Quarterly Estimate Vouchers
Monthly Bookkeeping
pricing starts at-
Capture All Deductions
-
Balance Sheet and P&L
-
Real-Time Financials
S Corp Election Filing
pricing starts at-
Professionally Prepared
-
Filing Included
-
Late Filing