How to Make an S Corp Election: Form 2553, Deadlines, and Filing Steps

This guide covers who qualifies, how to complete Form 2553 part by part, which deadlines apply to new and existing businesses, and how to request late-election relief if you’ve already missed the window.

S Corp Election at a Glance

• An S corp election is a tax status choice, not a separate business entity. You file IRS Form 2553 to tell the IRS to tax your corporation or LLC as an S corporation.
• The standard deadline is 2 months and 15 days after the start of the tax year you want the election to take effect. Missing it does not mean you lose the option permanently.
• To qualify, your business must have no more than 100 shareholders, only one class of stock, and all shareholders must be U.S. citizens or resident aliens.
• LLCs can elect S corp taxation using Form 2553. A multi-member LLC that has never filed as a corporation may need to file Form 8832 first in limited circumstances.
• If you miss the deadline, the IRS offers late election relief under Revenue Procedure 2013-30, as long as you can show reasonable cause.
• After the election is approved, you must run payroll, pay yourself a reasonable salary, file Form 1120-S annually, and issue Schedule K-1s to all shareholders.

What Is an S Corp Election?

An S corp election is a tax status choice, not a new business entity, made by filing IRS Form 2553, officially titled Election by a Small Business Corporation. Filing does not change your legal structure under state law; your LLC or corporation stays exactly as it is. Once the election takes effect, profits and losses flow directly to shareholders’ personal returns, avoiding the double taxation C corporations face.

The second reason owners elect S corp status is payroll tax savings. As an S corp owner-employee, you split income into two buckets: a reasonable salary subject to payroll taxes, and distributions that are not subject to self-employment tax. That structure can save $5,000–$20,000 or more annually, depending on your income level.

S Corp vs. Default LLC Taxation: a Quick Comparison

The numbers above are illustrative. Your actual tax savings depend on what counts as a reasonable salary in your industry, your total net income, and your overall tax picture. The math typically works when net income consistently exceeds $50,000–$60,000. Below that threshold, compliance costs may outweigh the savings.

Who Qualifies for S Corporation Status?

Before you touch Form 2553, confirm your business passes every eligibility test. Missing even one, such as having too many shareholders or the wrong type of owner, can void your election and cause the IRS to treat your company as a C corporation retroactively.

S Corp Eligibility Checklist

• ✅ Domestic entity. Your business must be organized in the United States.
• ✅ No more than 100 shareholders. A married couple and their estates count as one shareholder; all members of a qualifying family and their estates may also be treated as one.
• ✅ Eligible shareholders only. All shareholders must be U.S. citizens or resident aliens, certain estates, eligible trusts, or qualifying tax-exempt organizations.
• ✅ One class of stock. Differences in voting rights are allowed, but liquidation rights, distribution preferences, or special redemption features will violate the one-class restriction and invalidate the election.
• ✅ Not an ineligible corporation type. Certain financial institutions, insurance companies, and domestic international sales corporations are excluded.

Who Cannot Elect S Corp Status?

• ❌ Non-resident alien shareholders. A single non-resident alien acquiring even one share ends the election on the date of acquisition.
• ❌ Corporations or partnerships as shareholders. If your cap table includes another LLC taxed as a partnership or any corporate entity, the election fails.
• ❌ More than one class of stock. Issuing preferred shares with different distribution or liquidation rights, even informally through side agreements, creates a second class and disqualifies the entity.
• ❌ More than 100 shareholders. Growth past 100 (applying the family aggregation rules) automatically terminates the election.

Eligibility isn’t a one-time checkpoint; it’s an ongoing obligation. The IRS terminates your election automatically if you violate any requirement, retroactive to the date of the violation, which means amended returns and potential penalties. Once revoked or terminated, you generally cannot re-elect S corp status for five tax years.

How to Elect S Corporation Status in 5 Steps

1. Confirm your entity is eligible
2. Obtain IRS Form 2553
3. Complete Form 2553 part by part
4. File by the deadline
5. Confirm the election with the IRS

Step 1: Confirm Your Entity Is Eligible

Run through the eligibility checklist above. Every requirement must be met on the filing date and on an ongoing basis.

One additional decision point applies to LLCs: depending on how your LLC is currently classified for tax purposes, you may need to file Form 8832 before, or at the same time as, Form 2553. The full breakdown is in the LLC section below.

Step 2: Obtain IRS Form 2553

IRS Form 2553 is available at IRS.gov/pub/irs-pdf/f2553.pdf. Download the current version directly from the IRS website.

The IRS does not accept Form 2553 by email, online upload, or any electronic method. You must fax or mail a physical copy. Your submission method affects processing speed, which matters when a deadline is close.

Step 3: Complete Form 2553 Part by Part

Form 2553 has four parts. Most filers need to complete Part I and the Shareholder Consent Statement.

Part I: Election information

Enter the legal name and mailing address of the corporation or entity, then complete the remaining items.

• Item A: The corporation’s EIN. If you applied but haven’t received it yet, write “Applied for” with the application date.
• Item B: The date your business was incorporated or registered.
• Item C: The state where you formed the entity.
• Item E: The effective date you want the election to take effect, typically the first day of the tax year.
• Item F: Your tax year. Most businesses use a calendar year ending December 31. If you check box (2) or (4), provide the additional tax year information and complete Part II.

The Shareholder Consent Statement (Part I, Columns J–N)

Every shareholder must sign. Form 2553 must also be signed and dated by an authorized corporate officer. Without that signature, the IRS will not treat it as timely filed.

• Column J: Names and addresses of all shareholders who must consent.
• Column K: Each shareholder’s signature and date.
• Column L: Number of shares each shareholder owns, or their ownership percentage.
• Column M: Social Security number for each shareholder, or EIN if the shareholder is a trust, estate, or exempt organization.
• Column N: The date each shareholder’s tax year ends, typically December 31.

Part II: Selection of fiscal tax year

Only fiscal-year filers need to complete Part II. Leave it blank if you selected the calendar year in Part I.

Part III: Qualified Subchapter S Trust (QSST) election

Used by the income beneficiary or legal representative of certain qualified subchapter S trusts to make the QSST election required by Section 1361(d)(2). Most small-business filers leave Part III blank.

Part IV: Late corporate classification election

Applies to LLCs that have not previously been treated as a corporation and are filing Form 2553 to simultaneously elect corporate classification and S corp status. If you are an LLC owner filing Form 2553 directly, without a prior Form 8832, complete Part IV to trigger the deemed corporate classification. Skipping this section when it applies is one of the most common LLC-specific filing errors.

Step 4: File Form 2553 by the Deadline

The standard deadline is 2 months and 15 days after the start of the tax year you want the election to take effect. For a calendar-year entity with a January 1 tax year start, that means March 15.

File the original election, no photocopies, by mail or fax to the IRS service center for your entity’s location. The correct addresses and fax numbers are in the filing section below.

Faxing is faster: it creates an instant transmission record and typically gets processed two to four weeks sooner than mail. If your deadline is close, fax.

Step 5: Confirm the Election with the IRS

Filing Form 2553 does not trigger an automatic acknowledgment. When the IRS approves your election, it sends a CP261 notice confirming S corp status and the effective date. Store it permanently. The IRS issues it only once, and you may need it to demonstrate S corp status to lenders, state agencies, or future accountants.

If you haven’t received CP261 within 60 days of faxing, or 90 days of mailing, call the IRS Business & Specialty Tax Line at 800-829-4933. Have your EIN, filing date, and transmission confirmation or certified mail receipt ready. If box Q1 in Part II is checked, allow up to 5 months before following up.

S Corp Election Deadlines: New Businesses vs. Existing Businesses

The general rule: file Form 2553 no later than 2 months and 15 days after the start of the tax year you want the election to take effect. For calendar-year businesses, that means March 15.

New businesses don’t use March 15 as their anchor date. A new corporation or LLC must file within two months and 15 days of the date of formation for the election to take effect in the first tax year. Miss that window and the election defaults to the following tax year.

Watch the calendar. If March 15 falls on a weekend or federal holiday, the deadline shifts to the next business day.

Missing the deadline costs you a full year. If Form 2553 arrives after the deadline, your election won’t take effect until the following January 1. The IRS does not grant extensions for Form 2553.

Missed the Deadline? How to Request Late S Corp Election Relief

Missing the S corp election deadline doesn’t end your options. The IRS allows late elections under Revenue Procedure 2013-30. If fewer than 3 years and 75 days have passed since your intended effective date, you can file Form 2553 late with a reasonable cause statement.

If you’re outside that window, a private letter ruling (PLR) is the remaining option. PLR user fees start at $3,500 and can run significantly higher, with no guarantee of approval.

IRS Revenue Procedure 2013-30

Four requirements must all be met.

1. The entity intended to be classified as an S corporation as of the intended effective date.
2. The entity failed to qualify solely because the election was not timely filed.
3. There is reasonable cause for the failure, and the entity acted diligently to correct the mistake upon discovery.
4. The entity requests relief within 3 years and 75 days from the intended effective date.

All shareholders must have reported income consistently as if the S corp election was already in effect. If shareholders filed inconsistently, the documentation requirements increase significantly.

How to file the late election:

• File a copy of Form 2553 with the initial Form 1120-S. On Form 2553, include a statement establishing reasonable cause and write “Filed Pursuant to Rev. Proc. 2013-30” in the top margin of page 1.
• Alternatively, file a paper copy of Form 2553 and the reasonable cause statement with the appropriate Service Center before filing Form 1120-S, separate from any other returns.

Rev. Proc. 2013-30 relief applies only to late elections that would otherwise be valid. Eligibility problems, such as ineligible shareholders or a second class of stock, require a separate remedy under IRC Section 1362(f).

What counts as reasonable cause? The most commonly accepted explanations include relying on a tax advisor who failed to file, not knowing about the filing requirement for a newly formed business, or catching an administrative error during tax return preparation. Keep documentation that proves your intent to elect S status. Emails, meeting minutes, and prior tax drafts all support your statement.

Late relief applies to the federal election. State-level obligations are a separate question.

LLC to S Corp: Do You Need Form 8832 First?

In most cases, no. Under Treasury Regulations, an eligible entity that timely files Form 2553 is deemed to have elected to be classified as an association taxable as a corporation. A separate Form 8832 is not required.

Form 8832 lets an eligible entity choose how it’s taxed: as a C corporation, partnership, or disregarded entity. S corp status is not one of those options. The two forms solve different problems. Here’s how to decide what you need:

If your LLC is currently treated as a sole proprietorship or partnership, Part IV of Form 2553 instructs the IRS to first reclassify the entity as a corporation, then elect S corp status, replacing the need for a separate Form 8832.

The one narrow scenario where Form 8832 enters the picture: when an entity wants to elect corporate classification on a date different from the S corp effective date, or needs to correct a prior classification issue before the S election can take effect. If the entity plans to make both elections on the same date, only Form 2553 is filed.

If Form 8832 has been filed separately, attach a copy to Form 2553 with an explanatory statement noting the check-the-box election. An entity that failed to qualify as a corporation solely because Form 8832 wasn’t timely filed may still request relief under Rev. Proc. 2013-30.

Where to File Form 2553 and What to Expect

Sending Form 2553 to the wrong service center can delay processing past the election deadline. Your routing depends on where your principal business office is located, not where you incorporated.

Verify these assignments at IRS.gov before filing, as the IRS occasionally updates processing center assignments.

Mail vs. Fax

Mailed forms sit in a mailroom queue before processing, with typical times of 6–8 weeks. Faxed forms enter the IRS system immediately, with processing times of 3–5 weeks, and you get a transmission confirmation with a timestamp as proof of filing. If your deadline is close, fax. If you mail, use certified mail with return receipt.

One common trap: some tax software lets you generate a completed Form 2553 PDF, but you still need to print and mail or fax it. Do not assume your software submitted it electronically.

What to Expect After You File

When your election is approved, you’ll receive a CP261 notice confirming S corp status and the effective date. If you haven’t received it within 2 months of filing, or 5 months if box Q1 is checked, call the IRS Business & Specialty Tax Line at 800-829-4933.

Sending to the wrong center doesn’t invalidate your election, but it adds weeks while the IRS reroutes internally, which is a real problem if you’re already close to the deadline.

Common Form 2553 Mistakes That Cause Rejection or Delay

• Missing shareholder signatures. Every shareholder on the date the election is filed must sign the consent statement, including shareholders who held shares only briefly between the intended effective date and the filing date. Collect all signatures before you send anything.
• Incorrect EIN or business name. The EIN and business name must match IRS records exactly. Even a minor discrepancy, such as an abbreviated name, a missing “LLC,” or a transposed digit, flags the form for review. Pull your EIN confirmation letter and copy the name character-for-character.
• Blank or incorrect effective date. Leaving Line E blank or entering an incorrect date creates confusion and potential rejection. The most consequential version: choosing an effective date already outside the allowable window. If the 75-day window has closed, you cannot backdate the form.
• Filing past the deadline without a reasonable cause statement. Filing past the deadline without a late relief statement means the IRS will push your election to the following tax year, or reject it outright. If you’re past the window, attach a Rev. Proc. 2013-30 statement and write the required notation at the top of page 1.
• Incorrect or missing shareholder tax identification numbers. Every shareholder’s SSN or EIN must be accurate and complete. Verify each number against the shareholder’s Social Security card or EIN confirmation letter before filing.
• LLC filers omitting Part IV when required. LLCs that have never been treated as a corporation must complete Part IV to trigger the deemed corporate classification. Skipping it leaves the IRS without the information needed to process the election correctly.

Do States Require a Separate S Corp Election?

The federal S corp election handles your IRS tax classification, but it doesn’t automatically resolve state tax obligations. Most states follow the federal election without requiring a separate filing, but a meaningful number do not.

• New York requires a separate state S corp election on Form CT-6, filed with the New York State Department of Taxation and Finance.
• New Jersey requires a separate election on Form CBT-2553, filed with the New Jersey Division of Taxation.
• California does not require a separate election but imposes a 1.5% franchise tax on S corp net income, with a minimum annual franchise tax of $800.
• Tennessee imposes a franchise and excise tax on S corporations that may require separate registration with the Tennessee Department of Revenue.
• Texas subjects S corporations to the franchise tax (margin tax) regardless of the federal election, calculated on total revenue rather than net income.
• Illinois recognizes the federal election automatically but imposes a personal property replacement tax of 1.5% on S corp net income.
• Connecticut, Massachusetts, and Michigan each have S corp-level taxes or surcharges that apply even after the federal election is recognized. Check each state’s department of revenue for current rates and filing requirements.

State tax laws change, and the way the federal S corp election interacts with state-level treatment can get nuanced, especially for businesses operating in multiple states. Always verify requirements with your state’s department of revenue before assuming the federal election is sufficient.

After the Election: Your Ongoing S Corp Compliance Obligations

The CP261 notice is the starting line, not the finish line. Falling short on ongoing obligations can trigger IRS scrutiny, penalties, or termination of the election itself.

Paying Yourself a Reasonable Salary

The IRS requires S corp owner-employees who perform services for the business to pay themselves a reasonable salary subject to payroll taxes. “Reasonable” is based on what the market would pay for the same services. Tax professionals typically reference Bureau of Labor Statistics wage data for the relevant role and industry.

Failing to pay a reasonable salary is one of the most common IRS audit triggers for S corps. The IRS has successfully reclassified distributions as wages in cases where owner-employees paid themselves little or nothing while taking large distributions. The penalty includes back taxes, interest, and payroll tax penalties on the reclassified amounts.

Setting up Payroll

Once the election is effective, you must register for payroll, withhold federal income tax and FICA taxes, and make payroll deposits on the required schedule. Payroll cannot be deferred or handled informally. The IRS expects timely deposits and quarterly payroll tax filings (Form 941) from the first payroll period forward.

Annual Filing: Form 1120-S and Schedule K-1

S corporations file Form 1120-S annually, due March 15 for calendar-year filers. Each shareholder receives a Schedule K-1 reporting their share of income, deductions, and credits for use on their personal Form 1040.

Missing the Form 1120-S deadline triggers a per-shareholder, per-month penalty, currently $235 per shareholder per month, up to 12 months, which adds up quickly even for a small S corp.

Frequently Asked Questions About S Corp Elections

What Is an S Corp Election and How Does It Work?

An S corp election is a federal tax classification choice made by filing IRS Form 2553. It does not create a new legal entity. Your corporation or LLC remains unchanged under state law. Once effective, the business’s income, deductions, and credits pass through to shareholders’ personal returns, and the corporation itself pays no federal income tax.

Who Qualifies for S Corporation Status?

Your business must be a domestic corporation or eligible LLC with no more than 100 shareholders, only one class of stock, and all shareholders must be U.S. citizens or resident aliens (or certain trusts, estates, or tax-exempt organizations). Certain corporation types, including some financial institutions and insurance companies, are ineligible regardless of shareholder composition.

What Is IRS Form 2553 and What Information Does It Require?

Form 2553, officially titled Election by a Small Business Corporation, requires the entity’s legal name, EIN, state of incorporation, intended effective date, tax year selection, and signed consent from every shareholder, including each shareholder’s name, address, tax identification number, share count, and tax year end date.

How Do You Complete Form 2553 Line by Line?

Part I collects identifying information and the tax year selection. The Shareholder Consent Statement (columns J–N) requires every shareholder’s signature, TIN, share count, and tax year end. Part II applies only to fiscal-year filers. Part III applies only to qualified subchapter S trust beneficiaries. LLC filers who have not previously been treated as a corporation must also complete Part IV. The full field-by-field walkthrough is in Step 3 above.

What Is the Deadline to File Form 2553 for a New Business?

2 months and 15 days from the date the entity first had shareholders, assets, or began doing business. For a corporation formed July 1, the deadline is September 14. Miss this window and the election defaults to the following tax year.

What Is the Deadline to File Form 2553 for an Existing Business Changing Its Tax Status?

An existing business may file Form 2553 at any time during the prior tax year, or by March 15 of the year the election is to be effective.