How to Fill Out Form S Corp 2553: A Step-by-Step Guide

Eligible corporations must use Form S Corp 2553, commonly known as the Election by a Small Business Corporation, to choose S corporation status. By making this choice, the corporation can avoid paying taxes twice and instead pass along gains and losses to shareholders for inclusion on their individual tax returns. Here is a step-by-step tutorial for completing Form 2553 if you want to choose S corporation status for your small company corporation.

Determine eligibility in step one

Your corporation needs to satisfy the following criteria in order to be eligible for S corporation status: Be a domestic corporation

Have no more than 100 shareholders

Have only one class of stock

Not be an ineligible corporation (such as some financial institutions, insurance companies, and international sales corporations)

Be a domestic corporation

Have only allowable shareholders (individuals, specific trusts and estates, and tax-exempt organizations)

Have no more than 100 shareholders

Step 2: Finish filling out the top of Form 2553 Included in this are the legal name, address, and employer identification number (EIN) of your corporation. You must also include the dates on which your corporation was formally established and when it started conducting business.

Step 3: Select the S corporation checkbox

To indicate that your corporation is choosing the S corporation status, you must select a box on Form 2553. Line E of Part I contains the box.

Step 4: Provide information on shareholders Each shareholder’s name, address, and taxpayer identification number (TIN) must be provided. Include the percentage of stock owned by each stakeholder as well.

Step 5: Have all shareholders sign and date the form

This is a required step. You can add more signature pages if there are more than two stockholders.

Can an LLC pay S Corp taxes?

Yes, by submitting Form 2553, an LLC can choose to be taxed as a S corporation. The LLC must satisfy the same prerequisites for qualification as a corporation, including having no more than 100 stockholders and only one class of stock.

Can S Corp elections be filed online?

You can submit Form 2553 electronically using the Form 2553 Online tool provided by the IRS. Not all corporations, nevertheless, are qualified to submit online. On the IRS website, you can look up the prerequisites.

How does a single member LLC choose to become a S Corp? If a single-member LLC satisfies the requirements and files Form 2553, it may elect S corporation status. However, in order to be treated as a corporation for tax purposes, the LLC must first submit Form 8832. The LLC can file Form 2553 to elect S corporation status after being categorized as a corporation.