You are not regarded as an employee of a S corporation if you are a shareholder. Instead, as a business owner, you get a dividend from the company’s earnings. This indicates that the income you get from the S corporation is not subject to self-employment tax.
However, if you serve as an officer or employee of the S corporation, you are regarded as self-employed in that capacity. In other words, you have to pay self-employment taxes on the money you get paid for such services.
The form used to choose S corporation status for a corporation is Form 2553. Depending on how you file Form 2553, different processing times apply. The processing time for online filings is up to 90 days. The processing time for mail-in applications is up to six months.
The 15th day of the third month of the corporation’s tax year is the due date for submitting Form 2553. For instance, if a corporation’s tax year starts on January 1st, the Form 2553 must be submitted by March 15th.
A corporation may choose to have a tax year that does not coincide with the calendar year by making a Section 444 election. This can be helpful for businesses whose fiscal year doesn’t coincide with the year.
What is the most advantageous tax status for an LLC? The particulars of the company will determine which tax categorization is ideal for an LLC. If an LLC has just one owner, it is automatically categorized as a disregarded entity for tax purposes; if it has several owners, it is categorized as a partnership. An LLC can, however, choose to be taxed as either a C company or a S corporation. In order to choose the appropriate tax status for your LLC, it is crucial to speak with a tax expert.
Yes, original signatures are required on Form 2553.