S Corp Tax StrategiesForm 2553 timing, and the steps after the election
Form 2553 is how an LLC or a corporation elects S corp status. Here's when it's due, what to do if you missed it, and the steps after it's filed.
What Form 2553 does
Form 2553 tells the IRS that the company will file as an S corporation. The company has to be eligible: a domestic company with no more than 100 shareholders, one class of stock, and only allowed owners, such as individuals and certain trusts and estates. The full eligibility list is in the Form 2553 instructions on irs.gov.
In most cases an LLC can skip Form 8832, because sending Form 2553 on time takes care of the corporate tax choice as well. After the form is in, your salary and payroll are the next steps.
When Form 2553 is due
You have until 2 months and 15 days after the first day of the tax year you want the election to cover, and an early filing in the prior year counts too.
- For S corp status starting January 1, 2027, file any time in 2026 or by March 15, 2027.
- For a new company, the clock starts when the company first has shareholders, has assets, or starts doing business, whichever comes first.
- Miss the deadline without relief, and the election generally takes effect the following tax year.
If you missed the deadline
The IRS has a late-election relief procedure that many small businesses can use. Your window is generally 3 years and 75 days from the start date you were aiming for. You attach a statement explaining why the form was late, and you write "FILED PURSUANT TO REV. PROC. 2013-30" at the top.
Relief has its own conditions, and the IRS decides each request. If your dates fit the procedure, we prepare the request with you on the call.
Who signs it
A company officer puts a signature on Form 2553. Each shareholder's consent goes on the form itself or on a separate signed statement. When the company has more than one owner, tell us who owns what before we pick a start date.
A company that already exists
Many owners already have an LLC that has been reported on the personal return, because nothing else was ever elected. The election doesn't change the business. It changes the return going forward, once it takes effect. The books need separate accounts for wages, contributions and distributions starting that day.
The return and the K-1 each year
Once the company is an S corp, it files Form 1120-S by the 15th day of the third month after the tax year ends. That's March 15 for a calendar-year company, or the next business day when it lands on a weekend. Need more time? Form 7004 extends the 1120-S filing date by six months.
Each owner gets a K-1 showing their share of the profit, and it goes on the personal return. Basis travels with that K-1. Contributions raise basis, distributions are tested against it, and losses have their own limits. Separate accounts in the books keep all three right.
What to do in the months after you file
- Keep the IRS acceptance letter with your company records.
- Set a reasonable salary and start payroll.
- Close each month on a date you can keep.
- Compare how the salary affects your qualified business income deduction, using your own numbers.
If the numbers say waiting is better, you can hold off on the election. Choosing not to elect this year is a perfectly good outcome. See how the savings work before you decide.
Questions owners ask about Form 2553
How do I know the election went through? The IRS sends a letter when it accepts Form 2553. If you can't find it, tell us on the form, and we'll help you confirm the election with the IRS.
Can I file Form 2553 myself? Yes. Many owners do. We can check the dates, the consents and the eligibility with you first, so everything is right before it goes in.
Ask about your Form 2553
You will be talking to the Steven Palmieri practice.
Tell us when the company started and when you want the election to begin.