Introduction
Electing S-corporation status can save your business real money on self-employment taxes—but only if you file Form 2553 correctly and on time. This guide walks you through exactly how to complete and submit Form 2553 so the IRS accepts your S-corp election the first time around.
What you’ll accomplish: By the end of this guide, you’ll know how to fill out every section of Form 2553, understand the filing deadlines, and successfully elect S-corp tax treatment for your LLC or corporation.
Who this guide is for: This guide is for small business owners who have already formed an LLC or C-corporation and want to elect S-corp taxation status. If you haven’t formed your business entity yet, you’ll need to do that first before filing Form 2553.
What you’ll need:
- Your business’s Employer Identification Number (EIN)
- Formation documents (articles of organization or Incorporation)
- Shareholder or member information
- A copy of your state business formation confirmation
- About 30–45 minutes to complete the form
Let’s get your S-corp election filed correctly.
Before You Start
Prerequisites
Before you can file Form 2553, your business needs to meet several IRS requirements:
- Entity type: Your business must be a domestic LLC or corporation (not a foreign entity operating in the U.S.)
- Shareholder limit: You can have no more than 100 shareholders or members
- Shareholder eligibility: All shareholders must be individuals, certain trusts, or estates—not partnerships, corporations, or non-resident aliens
- Single class of stock: Your business can only have one class of stock (though differences in voting rights are allowed)
- EIN issued: Your business must already have a federal EIN
Preparation Steps
1. Confirm your entity is properly formed and in good standing with your state
2. Obtain your EIN from the IRS if you don’t already have one
3. Gather consent from all shareholders or LLC members (everyone must agree to the election)
4. Determine your desired effective date for S-corp treatment
5. Identify your tax year (most small businesses use a calendar year)
Information to Gather
Before sitting down to complete the form, collect the following:
- Legal business name and address exactly as registered with the IRS
- EIN
- Date and state of incorporation/formation
- Names, addresses, and Social Security Numbers of all shareholders
- Number of shares owned by each shareholder (or percentage of ownership for LLCs)
- Each shareholder’s tax year end date
- Signatures from all shareholders
Step-by-Step Process
Step 1: Confirm Your Filing Deadline
Form 2553 must be filed either:
- Within 75 days of forming your business, or
- Within 75 days of the start of the tax year you want the election to take effect, or
- Anytime during the preceding tax year
Missing this window doesn’t necessarily kill your chances—the IRS allows late election relief in many cases (more on that below)—but filing on time saves you extra paperwork.
Tip: Mark your calendar the moment you form your LLC or corporation so you don’t accidentally miss the 75-day window.
Step 2: Download the Current Form 2553
Get the most recent version of Form 2553 directly from the IRS website. Using an outdated version can cause processing delays or rejection.
Step 3: Complete Part I — Election Information
This is the core section of the form:
- Line A: Enter your business’s EIN
- Line B: Enter your business’s legal name and mailing address
- Line C: Check the box indicating whether your address has changed since your last IRS filing
- Line D: Enter the date incorporated/organized and the state
- Line E: Enter the effective date you want the S-corp election to begin
- Line F: Select your tax year (calendar year is standard for most small businesses)
- Line G: If you have 100 or fewer shareholders and qualify under family attribution rules, check this box
- Line H: Provide the name and contact information of a corporate officer or representative the IRS can contact with questions
Tip: Double-check that your business name and EIN match IRS records exactly. Even small discrepancies (like “LLC” vs “L.L.C.”) can cause processing delays.
Step 4: Complete the Shareholder Consent Section
Every shareholder or LLC member must consent to the S-corp election. For each shareholder, list:
- Full legal name and address
- Social Security Number or EIN
- Number of shares owned (or ownership percentage for LLCs)
- Date shares were acquired
- Tax year end
- Signature and date
Important: Every single shareholder must sign—there are no exceptions. If even one shareholder refuses or forgets, the IRS will reject your election.
Step 5: Complete Part II (If Applicable)
Part II only applies if you’re selecting a fiscal tax year other than a calendar year. Most small businesses skip this section and use the calendar year, making Part I sufficient.
Step 6: Complete Part III (If Applicable)
Part III applies only to certain trusts making a Qualified Subchapter S Trust (QSST) election. Skip this unless a trust is a shareholder in your business.
Step 7: Review the Entire Form
Before submitting, review every field for accuracy. Common review points:
- Does the EIN match IRS records?
- Are all shareholder signatures present?
- Is the effective date realistic given your filing date?
- Did you select the correct tax year?
Step 8: Submit Form 2553
You have two options for submission:
- Fax: The IRS accepts faxed submissions to the service center address listed in the form’s instructions (based on your state)
- Mail: Send to the appropriate IRS service center address, also listed in the instructions
There is no online filing option for Form 2553 at this time.
Tip: If you fax the form, keep your fax confirmation receipt. This serves as proof of timely filing if there’s ever a dispute.
Step 9: Wait for IRS Confirmation
The IRS typically takes 60 days to process Form 2553. You’ll receive a confirmation letter (CP261 Notice) once your election is approved. If you don’t hear back within 60 days, follow up with the IRS directly.
Requirements
Documents Needed
- Completed Form 2553
- EIN confirmation letter (CP 575)
- Articles of Organization or Incorporation
- Shareholder identification information
Information Required
- Business legal name, address, and EIN
- Formation date and state
- Desired S-corp effective date
- Complete shareholder list with signatures
State Considerations
Form 2553 is a federal election—it doesn’t automatically apply to your state taxes. Many states recognize the federal S-corp election automatically, but some (like New York and New Jersey) require a separate state-level S-corp election form. Check your state’s Department of Revenue website to confirm whether additional filing is needed.
Tips for Success
- File early: Don’t wait until the deadline to file. Submitting a few weeks early gives you buffer time in case of errors.
- Use certified mail or fax confirmation: Always keep proof of your submission date.
- Get professional help for late elections: If you’re past the 75-day window, the IRS allows relief under Revenue Procedure 2013-30, but it requires additional documentation and a reasonable cause explanation.
- Match names exactly: Make sure your business name matches IRS records character-for-character.
- Keep copies: Retain a signed copy of your completed Form 2553 for your permanent business records.
- Coordinate with your accountant: An S-corp election changes how you handle payroll and owner compensation—loop in your tax professional before your effective date arrives.
Common Mistakes
Missing shareholder signatures. This is the most common reason for rejection. Every shareholder must sign, even minority owners.
Filing late without seeking relief. If you missed your deadline, don’t just submit the form and hope for the best—include a reasonable cause statement requesting late election relief under Rev. Proc. 2013-30.
Incorrect EIN or business name. Even a small typo can cause the IRS to reject or delay your filing. Verify against your CP 575 EIN confirmation letter.
Choosing an unrealistic effective date. You can’t select an effective date far in the future or one that doesn’t align with IRS rules for your filing date.
Ignoring state-level requirements. Filing Form 2553 federally doesn’t mean you’re automatically an S-corp in your state. Check your state’s specific rules.
Not keeping proof of filing. If the IRS claims they never received your form, you’ll need documentation (fax confirmation or certified mail receipt) to prove otherwise.
How to fix errors: If you discover a mistake after submission, contact the IRS Business & Specialty Tax line directly. In many cases, you can submit a corrected form with an explanation letter referencing your original submission.
Next Steps
Once your S-corp election is approved, here’s what to tackle next:
1. Set up payroll. As an S-corp, owners who work in the business must pay themselves a “reasonable salary” through payroll, not just distributions.
2. Open a business bank account (if you haven’t already) to keep S-corp finances separate from personal funds.
3. Update your accounting system to track shareholder distributions and payroll separately.
4. File Form 1120-S annually. This is your S-corp’s annual tax return, due March 15th each year.
5. Issue K-1s to shareholders. Each shareholder needs a Schedule K-1 reflecting their share of income for their personal tax return.
6. Review your state filing requirements annually, as some states have ongoing S-corp fees or reports.
FAQ
1. How long does it take for the IRS to approve Form 2553?
Typically around 60 days. You’ll receive a CP261 Notice confirming approval.
2. Can I file Form 2553 online?
No. The IRS only accepts Form 2553 via fax or mail—there’s no online submission option currently.
3. What happens if I miss the 75-day deadline?
You may still qualify for late election relief under Revenue Procedure 2013-30, provided you can show reasonable cause for the delay and file within a specified timeframe (generally within 3 years and 75 days of the intended effective date).
4. Does electing S-corp status change my LLC’s legal structure?
No. Your LLC remains an LLC legally—the S-corp election only changes how your business is taxed by the IRS.
5. Do I need to file Form 2553 every year?
No. Once approved, your S-corp election remains in effect indefinitely unless you revoke it or it’s terminated due to an eligibility violation (like exceeding 100 shareholders).
Conclusion
Filing Form 2553 correctly is one of the most impactful steps you can take to reduce your business’s tax burden—but the process demands attention to detail and strict adherence to deadlines. If you’d rather skip the paperwork headaches and get it done right the first time, LegalZone.com is here to help.
We’ve helped thousands of entrepreneurs form LLCs, corporations, and nonprofits—and we can help you navigate your S-corp election with the same level of care. With affordable pricing, fast turnaround times, and expert support every step of the way, LegalZone.com makes business formation simple. Ready to take the next step? Start your business journey with LegalZone.com today and let our team handle the details while you focus on growing your business.
