Form 2553, officially titled "Election by a Small Business Corporation," is the IRS document that allows eligible domestic corporations and LLCs to elect S-Corporation tax status.

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This election changes how the entity is taxed, shifting from traditional corporate taxation to a pass-through structure where profits and losses flow directly to shareholders' personal tax returns.

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The S-Corporation election offers tax advantages such as the elimination of double taxation on corporate profits, potential self-employment tax savings for owner-employees, and flexible loss deduction opportunities.

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Shareholders can receive salary and distributions, with only the salary portion subject to payroll taxes, thus creating substantial tax savings when structured properly.

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However, the timing of Form 2553 filing is important. The IRS imposes a strict 75-day deadline from either the corporation's formation date or the beginning of the tax year when the election should take effect.

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This article discusses all you need to know about Form 2553 S-Corp election, including the steps for filing it, deadlines, and eligibility criteria.

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Who Should File Form 2553?

Understanding who can and should file Form 2553 can save your business thousands in taxes annually. Here are the eligibility criteria for filing this tax form:

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Eligible Domestic Corporations

Traditional C-corporations are the most common candidates for S-Corp election. If your business is incorporated in any U.S. state and currently pays corporate income tax, you may benefit from filing Form 2553.

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The requirements for corporate S-Corp election include:

• Incorporation in the United States: Foreign corporations cannot elect S-Corp status
• No more than 100 shareholders: This limit includes family members counted as one shareholder under certain circumstances
• Only allowable shareholder types: Individual U.S. citizens, certain trusts, and estates qualify
• Single class of stock: Different voting rights are permitted, but profit and liquidation distributions must be proportional

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Most small to medium-sized corporations find the S-Corp election useful because it eliminates double taxation while maintaining corporate liability protection.

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Single-Member LLCs Electing Corporate Taxation

Single-member LLCs can make a powerful tax election by filing Form 2553, but the process requires two steps. First, elect corporate taxation using Form 8832 (Entity Classification Election), then, immediately file Form 2553 for S-Corp status

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This dual election strategy, often called "checking the box," allows single-member LLC owners to:

• Maintain LLC operational flexibility
• Gain S-Corp tax advantages
• Reduce self-employment taxes on business profits
• Keep simplified record-keeping requirements

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Both elections should be filed simultaneously to avoid any period of C-corporation taxation between elections.

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Multi-Member LLCs Electing S-Corp Status

Multi-member LLCs face a similar but slightly more complex election process. These businesses usually operate as partnerships for tax purposes but can elect S-Corp taxation to reduce employment taxes.

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The multi-member LLC S-Corp election process involves:

• All members must consent to corporate taxation and S-Corp election
• Form 8832 and Form 2553 must be filed within the same timeframe
• Operating agreement considerations should address how S-Corp requirements affect member rights
• Employment tax implications for all member-employees must be evaluated

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Multi-member LLCs often benefit most from the S-Corp election when business profits exceed reasonable compensation levels for working members.

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New Entity Formations vs. Existing Corporations

New Entity Formations

Newly formed businesses have the most flexibility and usually the strongest incentive to file Form 2553:

• 75-day filing window starts from the date of incorporation or LLC formation
• Clean slate for tax planning without prior tax history complications
• Immediate tax benefits from the first year of operations
• No prior tax obligations to consider or unwind

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New entities should evaluate S-Corp election as part of their initial tax planning strategy, especially if they expect profitable operations and active owner involvement.

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Existing Corporations

Established businesses can also elect S-Corp status, but additional considerations apply:

• Built-in gains tax may apply to appreciated assets owned before election
• LIFO inventory recapture requirements for businesses using LIFO accounting
• Accumulated earnings and profits from C-corporation years affect distributions
• 75-day deadline still applies, measured from the beginning of the tax year when election becomes effective

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Existing corporations often benefit from professional tax planning to navigate these complexities and determine optimal election timing.

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2025 Filing Requirements and Deadlines

You must adhere to the deadlines for filing IRS Form 2553 if you want your business to qualify for S-Corporation status in 2025. Here are the key deadlines, late election relief options, and special considerations that apply to LLCs, thus ensuring you file Form 2553 accurately and on time.

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Standard 75-Day Rule

Most businesses aiming for S-Corp taxation in 2025 must file Form 2553 within 75 days of:

• New incorporations: For instance, a company formed on February 1, 2025, must file by April 17, 2025, for S-Corp status to be effective in 2025.
• Existing calendar-year entities: With a tax year starting January 1, the deadline is March 15, 2025.

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Note that 75 days equals “2 months + 15 days” after the start of the tax year.

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Late-Election Relief Procedures

Missed the deadline? Rev. Proc. 2013 30 gives relief if you file within 3 years and 75 days of your desired effective date. You must:

• Intend to be an S-Corp as of the effective date.
• Be eligible and qualify, i.e., meet shareholder, stock, and domestic entity rules.
• Provide a "reasonable cause" statement explaining why the deadline was missed.
• File within 3 years + 75 days.
• Demonstrate consistent tax treatment: you and shareholders must have filed returns (Form 1120 S, K-1s) reflecting S Corp status for the relevant years.

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Filing steps under Rev. Proc. 2013 30 include:

• Write “FILED PURSUANT TO REV. PROC. 2013 30” at the top of Form 2553.
• Attach a detailed “reasonable cause” statement on Part I, Line I.
• Include consent from all shareholders (in Part I, column K or via separate signed consents).
• Mail or fax the form (e-filing not available); if attached to Form 1120 S, note in the margin: “INCLUDES LATE ELECTION (S) FILED PURSUANT TO REV. PROC. 2013 30”.
• Expect IRS response in a few months. Approval grants retroactive S-Corp status; denials leave you taxed as a C-Corp.

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Special Timing Considerations for LLCs

LLCs have a two-step filing path:

• Make a corporate classification election under Form 8832, if classified as a disregarded entity or partnership.
• File Form 2553 within 2 months + 15 days of when your tax year begins or when Form 8832 effectively classifies you as a corporation.

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Ensure you synchronize both elections. The 75-day window for LLCs starts from the earliest of formation, acquisition of assets, or start of operations.

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Here’s an overview of the filing deadlines:

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Step-by-Step Filing Process for Form 2553 S-Corp Election

Filing Form 2553 correctly ensures the IRS approves your S-Corporation election. Let’s take a look at the steps involved so that you can submit all required information and avoid costly delays:

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Required Information and Documentation

Corporation Information (Part I)

When completing Form 2553, you'll need to provide important details about your corporation, including:

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Basic Entity Details

• Legal name of the corporation exactly as it appears on your Articles of Incorporation
• Employer Identification Number (EIN). Obtain this from the IRS if you don't have one
• Complete business address, including ZIP code
• State and date of incorporation
• Principal business activity and corresponding NAICS code

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Tax Year Selection

Choose your tax year carefully, as this affects your ongoing tax obligations:

• Calendar year (January 1 to December 31)
• Fiscal year (requires business purpose justification)
• 52-53 week tax year (for businesses with seasonal patterns)

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Stock Information

Document your corporation's stock structure:

• Number of shares authorized in Articles of Incorporation
• Number of shares issued and outstanding
• Classes of stock (S-Corps can only have one class)
• Voting rights arrangements

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Essential Supporting Documents

While not submitted with Form 2553, maintain these documents for your records:

• Articles of Incorporation
• Corporate bylaws
• Stock certificates or ledger
• Minutes from board meetings approving S-Corp election
• Shareholder agreements (if applicable)

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Shareholder Consent Requirements

Who Must Provide Consent

Every person who owns stock in the corporation on the date of election must consent to the S-Corporation election. This includes:

• All current shareholders as of the filing date
• Anyone who held stock during the tax year but sold before the election date
• Shareholders who acquired stock after incorporation but before filing

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Consent Information Required (Part II)

Each consenting shareholder must provide:

• Full legal name and address
• Social Security Number or Individual Taxpayer Identification Number
• Number of shares owned and dates acquired
• Percentage of stock ownership
• Tax year for which the election is effective
• Signature and date

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Special Consent Situations

• Married Shareholders: In community property states, both spouses may need to sign even if the stock is titled in one name only.
• Minor Shareholders: Parents or legal guardians must sign on behalf of minor children who own stock.
• Deceased Shareholders: If a shareholder dies after incorporation but before filing, their estate representative must provide consent.
• Trust Shareholders: Trustees must sign for shares held in trust, and the trust must be an eligible S-Corp shareholder type.

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Where and How to Submit Form 2553

IRS Service Centers by State

Mail your completed Form 2553 to the appropriate IRS service center based on your corporation's state of incorporation:

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• Department of the Treasury, Internal Revenue Service Center, Cincinnati, OH 45999: For corporations incorporated in Connecticut, Delaware, District of Columbia, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, West Virginia, Wisconsin
• Department of the Treasury, Internal Revenue Service Center, Ogden, UT 84201-0023: For corporations incorporated in Alabama, Alaska, Arizona, Arkansas, California, Colorado, Florida, Georgia, Hawaii, Idaho, Iowa, Kansas, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Utah, Washington, Wyoming

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Filing Methods and Timing

• Standard Mail: Send via certified mail with return receipt requested to track delivery and maintain proof of filing.
• Priority or Express Mail: Acceptable for meeting filing deadlines, but ensure proper addressing.
• Hand Delivery: Not recommended as IRS service centers don't typically accept walk-in deliveries.

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Confirmation of Receipt

The IRS doesn't automatically send confirmation of Form 2553 receipt. To verify processing:

• Allow 60 to 90 days for processing
• Call the IRS Business & Specialty Tax Line at 800-829-4933
• Request written confirmation if needed for banking or other business purposes

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What are the Ongoing Requirements After Filing Form 2553?

After filing Form 2553 and receiving S-Corp approval, your business must meet several ongoing IRS and operational requirements to maintain its S-Corp status. These include:

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File Annual S-Corp Tax Returns

• Submit Form 1120-S each year to report the corporation's income, deductions, and credits.
• Distribute Schedule K-1 to each shareholder, showing their share of income or loss.

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Pay Reasonable Compensation to Shareholder-Employees

• If shareholders work for the company, the S-Corp must pay them a reasonable salary, subject to payroll taxes.
• Failing to do so can trigger IRS audits and penalties.

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Maintain S-Corp Eligibility

Continue to meet IRS requirements:

• No more than 100 shareholders
• Only one class of stock
• Shareholders must be U.S. individuals, certain trusts, or estates (no corporations, partnerships, or non-resident aliens)

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Proper Record-Keeping and Compliance

• Maintain accurate books and financial records
• Document shareholder meetings and major decisions
• Keep copies of all tax filings and IRS correspondence

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Comply with Payroll and Withholding Requirements

• Set up payroll for shareholder-employees
• File quarterly and annual employment tax forms (e.g., Form 941, W-2s)
• Submit appropriate state tax filings if required

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Distribute Profits Correctly

• Profits and losses must be distributed in proportion to ownership shares
• Distributions (not subject to self-employment tax) must be tracked separately from salary

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Take Control of Your S-Corp Election with Expert Support

Filing Form 2553 for your S-Corp election isn't exactly what you signed up for when you decided to start a business. Between the strict 75-day deadline, confusing eligibility rules, and the fear of making a mistake that could cost you thousands, it's enough to keep any founder up at night.

You'd rather be building your product or talking to customers than struggling with tax forms.

Chore can help you handle S-Corp elections without the headaches. We take care of everything: checking if you qualify, gathering all the paperwork, getting those shareholder signatures, and making sure everything gets filed on time.

You won't have to worry about those costly mistakes that trip up so many businesses. No missed deadlines, no incomplete forms, no choosing the wrong tax year.

Also, Chore handles ongoing tasks like payroll setup and ensuring you stay compliant as you grow.

Book a demo with Chore to get your S-Corp election handled so you can get back to what you do best: running your business.

FAQs

What is IRS Form 2553 used for?

IRS Form 2553 is used by eligible small businesses to elect S-Corporation (S-Corp) status with the Internal Revenue Service (IRS). By filing this form, a business chooses to be taxed under Subchapter S of the Internal Revenue Code, which allows profits (and losses) to pass through directly to shareholders’ personal tax returns, avoiding double taxation at the corporate level.

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What are the commonest mistakes on Form 2553?

The commonest mistakes on Form 2553 include:

• Missing the 75-day filing deadline
• Incomplete shareholder signatures
• Choosing an invalid tax year
• Electing S-Corp status for ineligible entities (e.g., foreign-owned or multiple stock class businesses)
• Failing to follow up for IRS confirmation

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Can I file Form 2553 electronically?

No. The IRS does not accept e-filed Form 2553. You must submit it by mail or fax to the appropriate IRS Service Center based on your business location.

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How will I know if my S-Corp election is approved?

You'll know your S-Corp election is approved when the IRS sends a written confirmation, usually Letter CP261, to the address listed on your Form 2553. This letter will confirm the effective date of your S-Corp status.

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Here’s what to expect:

• Timeline: You should receive the confirmation within 60 days of filing.
• If you don’t receive it: Contact the IRS at 1-800-829-4933 (the Business & Specialty Tax Line) to check the status.
• Keep it safe: This letter is your official proof of S-Corp election. Store it with your business’s permanent tax records.

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If your election is denied, the IRS will send a different letter explaining the reason and whether you can correct the issue or reapply.

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What happens if I miss the 75-day deadline?

If you miss the 75-day deadline to file Form 2553, your S-Corp election may be delayed until the next tax year. However, you may still qualify for late election relief under IRS Revenue Procedure 2013-30 if:

• You meet all S-Corp eligibility requirements
• All shareholders have consistently reported income as if the election had been approved
• You can show reasonable cause for the late filing

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To apply, submit Form 2553 with a written explanation and note "Filed Pursuant to Rev. Proc. 2013-30" at the top.