March 06, 2023 | Posted in:

S Corporations: Information & Upcoming Deadline (Video)

The S Corporation election deadline for existing calendar year end LLCs, Partnerships, and C Corporations is March 15th. If you’re considering changing your company’s tax treatment from its default status to S Corporation status, now is the time to make the switch. Here are some things you need to know about S Corporations.

What is an S Corporation? An S Corporation is a special election made by a business that changes the way it is taxed. It is not a legal business entity in and of itself. This allows a business liability protection, keeping the owners’ personal assets separate from the company’s debts and lawsuits, while also avoiding the double taxation of C Corporations.

Companies structured as an LLC, a Partnership, or a C Corporation can file for the S Corporation tax election in the current tax year, if:

  • The company is a domestic corporation
  • Shareholders are U.S. citizens or resident aliens
  • The company will have no more than 100 shareholders
  • The company has only one class of stock
  • All shareholders agree to the S Corporation election and sign and submit Form 2553 to the IRS

When should you file for the S Corporation election? The corporation must get unanimous support from the owners or shareholders and file IRS Form 2553 no more than 2 months and 15 days after the beginning of  the tax year, which is March 15 for calendar year taxpayers. If you miss this deadline, you will not be able to start the status until the following calendar year. 

Brand new businesses have 2 months and 15 days from their date of formation to file for S Corp tax treatment for their first tax year

Form 2553 is for electing S Corporation status for federal taxes.  Many states automatically accept the federal status for state purposes, but not all of them.  Businesses should check with the states in which they file tax returns to see if a state S Corporation election is required.

There are many options for business owners to take when it comes to forming and registering their business. It is crucial to understand all of the options to find the best fit for you and your business, and to understand the legal and tax requirements that come along with the form of entity chosen.

If you are unsure if you should file for the S Corporation tax election, contact an Alloy Silverstein advisor today!

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Julie Strohlein CPA

Associate Partner
Julie has over 20 years of experience in public and private accounting, representing varied clientele including the medical, legal, and real estate industries and trusts.
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