Form 2553

Form 2553, Election by a Small Business Corporation, is the IRS form that a business files to become an S Corporation for tax purposes. Filing this form allows a corporation (or eligible LLC) to be taxed as a pass-through entity, avoiding double taxation.

Key Facts

• Purpose: To elect S corporation status under Internal Revenue Code (IRC) § 1362(a).
• Who Can File:
  
  • U.S. domestic corporations
  • Certain LLCs (if eligible and elect to be taxed as a corporation)
  • With no more than 100 shareholders (all must be U.S. citizens or residents)
  • Must have only one class of stock
• When to File: Within 2 months and 15 days after the beginning of the tax year the election is to take effect OR at any time in the year before the tax year you want S corp status to start.
• Information Required:
  
  • Company name, EIN, and address
  • Incorporation date
  • Tax year selection
  • Names, addresses, and Social Security Numbers of all shareholders
  • Shareholder signatures to consent to the election
• Failure to File Timely: Can result in default C corporation taxation, but late elections may be accepted with reasonable cause.

1. What does filing Form 2553 do?

It allows a corporation (or eligible LLC) to be taxed as an S corporation, avoiding corporate-level federal income taxes by passing income directly to shareholders.

2. Can an LLC file Form 2553?

Yes, if the LLC first elects to be taxed as a corporation using Form 8832, then files Form 2553 to elect S corp status.

3. What if I missed the deadline to file Form 2553?

You may still qualify for late election relief if you provide a valid reason (reasonable cause) and meet the IRS’s conditions.

4. Does every shareholder need to sign Form 2553?

Yes. All shareholders must consent to the S corporation election by signing Part I of the form.

5. Do I need to refile Form 2553 every year?

No. Once accepted, the election remains in effect unless revoked or terminated.