Form 2553. The Election by a Small Business Corporation (Form 2553) is the form an entity must file with the IRS to elect S corporation tax status. An LLC can file Form 2553 with the IRS if it properly qualifies as an S corporation.
Can an LLC file a late S corp election?
If a business has a reasonable cause for not filing Form 2553 on time, the IRS may approve the S Corp election retroactive to the start of the LLC’s or C Corporation’s tax year. The business owner must explain on Form 2553 why the filing was submitted late.
Should an LLC elect S corp status?
Although being taxed like an S corporation is probably chosen the least often by small business owners, it is an option. For some LLCs and their owners, this can actually provide a tax savings, particularly if the LLC operates an active trade or business and the payroll taxes on the owner or owners is high.
When to use Form 2553 for small business?
Form 2553 is used by qualifying small business corporations and limited liability companies to make the election prescribed by Sec. 1362. 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.
Can a LLC elect an S corporation on IRS Form 2553?
However, IRS Form 2553 allows LLCs and Corporations to elect “S” corporation status. The S corporation election is a tax designation granted through the Internal Revenue Code (IRC Section 1362 (a) that may reduce the owner’s taxable income.
How to enter C / O on IRS Form 2553?
If the corporation’s (entity’s) mailing address is the same as someone else’s, such as a shareholder’s, enter “C/O” and this person’s name following the name of the corporation (entity). Include the suite, room, or other unit number after the street address.
When do I need to file a late 2553?
A late election to be an S corporation and a late entity classification election for the same entity may be available if the entity can show that the failure to file Form 2553 on time was due to reasonable cause. Relief must be requested within 3 years and 75 days of the effective date entered on line E of Form 2553.
