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S Corporation Election

Background- What is an S Corporation?

Much like an LLC, an S Corporation does not exist at the State level, at the State level it is treated however it was initially formed. That is why, when you formed your business or had an attorney help you do so, they probably asked if you wanted to form a Partnership, LLC or Corporation. Once you form your Partnership, LLC or Corporation you may be able to make a special election to be treated as an S-Corporation for federal tax purposes.

Election to be treated as an S Corporation

If you have made your mind up, and want to become an S-Corporation then you will want to keep the following advice in mind:

  • You use form 2553 to make the S Corporation election.
  • A timely election is important. A timely election can be back dated in the following instances:
    • Timely elections are most commonly made either 2 months and fifteen days after forming
    • Or no later than 2 months and fifteen days after the 1st of the year, to be treated as such as of January 1 of the filing year.
  • All owners must sign this form
  • In most cases LLC’s cannot be owners of an S Corporation
  • Once you elect S Corporation status, you are treated as an S Corporation by the federal government for filing requirements for life, or until you make a different election at a later date
  • You cannot have more than 100 owners of an S Corporation in most instances, so this business type is designed for small businesses.

We help many other individuals and businesses with LLC filings, tax elections, general tax compliance and advice. If you do not feel comfortable taking care of these filings, reach out to us at [email protected]

Anthony Momany, Managing Member, Capstone CPA Group PLLC