Form 2553 Explained: How to Elect S-Corp Status

Fact-checked by the LegalGlass editorial team against primary sources · Published Aug 6, 2026 · Last updated Aug 6, 2026

Form 2553, "Election by a Small Business Corporation," is the IRS form an eligible corporation or LLC files to be taxed as an S corporation under Internal Revenue Code § 1362(a). There is no filing fee. You must file it no more than 2 months and 15 days after the beginning of the tax year the election is to take effect, and every shareholder must consent. Once accepted, the business files Form 1120-S instead of Form 1120.

What Form 2553 Is

Form 2553 is the election a small business files to be taxed as an S corporation rather than a C corporation. Per the IRS, "a corporation or other entity eligible to be treated as a corporation files this form to make an election under section 1362(a) to be an S corporation." Filing it does not change your legal entity - you remain a corporation or LLC under state law - it changes only how the business is taxed federally. After the election is accepted, the entity files Form 1120-S each year and passes income through to owners on Schedule K-1.

An S corporation is a pass-through entity, so business profit is generally taxed once, on the owners' individual returns, instead of at the corporate level and again on dividends. That is why many profitable LLCs and corporations weigh the election. For the structural trade-offs, see S-corp vs. LLC and the tax math in LLC vs. S-corp tax.

Why the Election Exists (Legal Basis)

The S-corporation election exists because 26 U.S. Code § 1362(a) lets "a small business corporation" elect not to be taxed as a regular corporation, and § 1362(a)(2) requires that "all persons who are shareholders" consent to the election. Congress created Subchapter S so closely held businesses could get liability protection without the double taxation of a C corporation. The eligibility rules that define a "small business corporation" sit in 26 U.S. Code § 1361.

Because the statute makes the election a formal, consent-based act with a fixed timing rule, the IRS enforces both the deadline and the shareholder-consent requirement strictly - the two places most elections fail. The rest of this page walks the eligibility rules, the deadline, how to file, and the relief available if you miss the date.

Who Is Eligible to Elect

To elect S-corporation status, the entity must satisfy every requirement in 26 U.S. Code § 1361, restated in the Instructions for Form 2553. All of the following must be true:

• Domestic entity. It is a domestic corporation, or a domestic entity (such as an LLC) eligible to elect corporate treatment.
• No more than 100 shareholders. Spouses and certain family members may be counted as a single shareholder.
• Only allowable shareholders. Shareholders are limited to individuals, estates, certain exempt organizations, and certain trusts described in § 1361(c)(2)(A).
• No nonresident alien shareholders. Every shareholder must be a U.S. citizen or resident.
• One class of stock. Differences in voting rights alone are disregarded.

An LLC qualifies if it is otherwise eligible; in most cases the single Form 2553 also makes the entity classification election, so a separate Form 8832 is not required. A business already operating on Schedule C or as a partnership on Form 1065 can move to S-corp treatment if it meets these tests.

The Filing Deadline

Form 2553 has a strict timing rule. The Instructions for Form 2553 require you to file "no more than 2 months and 15 days after the beginning of the tax year the election is to take effect, or at any time during the tax year preceding the tax year it is to take effect." For a calendar-year business whose tax year starts January 1, that puts the deadline at March 15 for the election to apply to that same year.

The "2 months and 15 days" counts from the first day of the tax year the election covers - for a newly formed entity, from the date it first has shareholders, acquires assets, or begins business, whichever is earliest. Miss the window and the election either takes effect the following year or requires the late-relief procedure below. Because the date is fixed, most owners file soon after formation or well before the new tax year begins.

How to Complete and File Form 2553

Completing Form 2553 has four parts, but a straightforward small business usually needs only Part I. Follow these steps.

1. Confirm eligibility. Check the § 1361 rules above - 100-shareholder limit, allowable shareholders only, one class of stock - before doing anything else.
2. Enter entity details in Part I. Provide the legal name, address, EIN, state and date of incorporation or formation, and the effective date of the election on line E.
3. Choose the tax year. Most elect a calendar year; a fiscal year requires a business-purpose showing in Part II.
4. Collect shareholder consents. Every shareholder must sign the consent statement in Part I - § 1362(a)(2) makes unanimous consent mandatory.
5. Sign and file. A corporate officer signs, then you mail or fax the form to the correct IRS service center before the deadline.

There is no IRS fee to file Form 2553. If you need an employer identification number first, see how to get an EIN; the entity must have an EIN before it can file.

Where to File Form 2553

You file Form 2553 by mail or fax with one of two IRS service centers, chosen by the state where your principal business is located, per Where to File Your Taxes for Form 2553. The current routing is:

Addresses and fax numbers change, so confirm the current routing on the IRS page above before you send. Keep proof of filing; the IRS notifies you whether the election is accepted, generally within about 60 days.

Late Election Relief

Missing the deadline is not always fatal. The Instructions for Form 2553 allow late election relief under Rev. Proc. 2013-30 if Form 2553 is filed "within 3 years and 75 days" of the effective date entered on line E and the business can show reasonable cause for filing late. The entity must also have intended to be an S corporation as of that date and have otherwise qualified.

To use the relief, you file the late Form 2553 with a statement establishing reasonable cause and the words "FILED PURSUANT TO REV. PROC. 2013-30" at the top, as the instructions direct. All shareholders must have reported their income consistently with S-corporation status for the years in question. If you fall outside the 3-years-and-75-days window, you generally cannot use this procedure and must request a private letter ruling.

What Changes After the Election

Once the S election is accepted, three things change. First, the business files Form 1120-S annually instead of Form 1120, and issues a Schedule K-1 to each shareholder. Second, an owner who works in the business becomes an employee and must be paid reasonable wages on a W-2, with payroll taxes withheld. Third, remaining profit distributed to owners is generally not subject to self-employment tax - the feature that motivates many elections.

These changes add payroll and a separate return, so the election pays off mainly once profit is high enough to justify the added compliance. Owners still make quarterly estimated payments on the pass-through income, and the return is due by the S-corporation deadline. For a full walkthrough of the return, see how to file business taxes.

S-Corp Payroll and Reasonable Compensation

After the election, an owner who works in the S corporation must be treated as an employee and paid reasonable wages, not just distributions. The IRS requires that S corporations "pay reasonable compensation to a shareholder-employee in return for services" before non-wage distributions are made, and warns that mischaracterizing wages as distributions to dodge payroll tax is a frequent audit target. The wages run through payroll with Social Security and Medicare tax withheld and matched; the remaining profit passes through to shareholders on Schedule K-1 (Form 1120-S) and is generally free of self-employment tax.

That split - a reasonable salary plus distributions - is the mechanism behind the S election's tax savings, and it is governed by the pass-through rules of 26 U.S. Code § 1366, which flows each shareholder's pro rata share of income and deductions to their return. Because the wages still carry full payroll tax, the election pays off only once profit comfortably exceeds a reasonable salary. The Instructions for Form 1120-S walk the annual return, which is due by the S-corporation deadline covered in when business taxes are due.

Common Form 2553 Mistakes

• Missing the 2-months-and-15-days deadline. The most common failure; if you are late, rely on the Rev. Proc. 2013-30 relief within 3 years and 75 days.
• Skipping a shareholder consent. Every shareholder must sign in Part I; one missing signature voids the election under § 1362(a)(2).
• Electing while ineligible. A nonresident alien shareholder, a second class of stock, or an ineligible entity shareholder disqualifies the election under § 1361.
• Assuming the entity has changed. Form 2553 changes only federal tax treatment, not your state-law corporation or LLC.
• Forgetting to file Form 1120-S. Once elected, the S corporation must file Form 1120-S annually, even in a loss year.

Related Guides

• S-corp vs. LLC - whether to elect at all.
• LLC vs. S-corp tax - the self-employment-tax savings math.
• Form 1120 vs. 1120-S vs. 1065 - the return you file after electing.
• Self-employment tax - what the S election reduces.
• Schedule C - the return you leave behind as a sole proprietor.
• Single-member LLC - the common entity that elects S status.
• Quarterly estimated taxes - required on pass-through income.
• When are business taxes due? - the Form 1120-S deadline.
• How to file business taxes - filing the S-corp return.
• Business tax hub - all returns and elections.

Frequently Asked Questions

What is the deadline to file Form 2553?

File no more than 2 months and 15 days after the beginning of the tax year the election is to take effect, or at any time during the preceding tax year, per the IRS Instructions for Form 2553. Late relief may be available within 3 years and 75 days.

Can an LLC file Form 2553?

Yes. An LLC eligible to be treated as a corporation can file Form 2553 to elect S-corporation status. In most cases the single Form 2553 also serves as the entity classification election, so a separate Form 8832 is not required.

How much does it cost to file Form 2553?

There is no IRS filing fee for Form 2553. The election is filed at no cost, though the S corporation must then file Form 1120-S each year and run payroll for owner-employees, which have their own costs.

What are the eligibility requirements for an S corporation?

Under 26 U.S. Code § 1361, the entity must be domestic, have no more than 100 shareholders, have only individuals, estates, and certain trusts as shareholders, have no nonresident alien shareholders, and have only one class of stock.

What happens if I file Form 2553 late?

You may qualify for late election relief under Rev. Proc. 2013-30 if Form 2553 is filed within 3 years and 75 days of the intended effective date and you show reasonable cause. You attach a reasonable-cause statement to the late Form 2553.

Where do I send Form 2553?

You mail or fax it to either the Kansas City, Missouri, or the Ogden, Utah, IRS service center, depending on your state. The current addresses and fax numbers are on the IRS Where to File Your Taxes for Form 2553 page.

Sources

1. IRS - About Form 2553, Election by a Small Business Corporation (election under section 1362(a); who files).
2. IRS - Instructions for Form 2553 (eligibility, 2-months-15-days deadline, Rev. Proc. 2013-30 relief, service-center routing).
3. IRS - Where to File Your Taxes for Form 2553 (Kansas City and Ogden addresses and fax numbers).
4. IRS - About Form 1120-S, U.S. Income Tax Return for an S Corporation.
5. IRS - About Form 8832, Entity Classification Election.
6. IRS - S Corporations (overview of pass-through treatment).
7. IRS - Instructions for Form 1120-S (the annual S-corporation return).
8. IRS - About Schedule K-1 (Form 1120-S) (shareholder's share of income).
9. IRS - S Corporation Compensation and Medical Insurance Issues (reasonable compensation requirement).
10. Cornell LII - 26 U.S. Code § 1366, Pass-thru of items to shareholders.
11. Cornell LII - 26 U.S. Code § 1362, Election; revocation; termination (election and unanimous consent).
12. Cornell LII - 26 U.S. Code § 1361, S corporation defined (100-shareholder limit, one class of stock, allowable shareholders).

LegalGlass provides general information for educational purposes and is not a law firm or a substitute for advice from a licensed attorney or tax professional. This page is information, not advice. Tax rules, forms, deadlines, and filing addresses change; verify current requirements with the IRS before acting.