Registering an S corporation is a two-step process: first you form a business entity with your state, then you file IRS Form 2553 to elect S corp tax status. The “S corporation” itself isn’t a type of company you register directly. It’s a tax classification you apply to an existing corporation (or LLC) so that business profits pass through to your personal tax return instead of being taxed at the corporate level. Here’s how to handle both steps.
Form a Business Entity With Your State First
Before the IRS will grant S corp status, you need a legally recognized business entity. Most people either form a corporation by filing articles of incorporation or form an LLC by filing articles of organization with their state’s business filing office (typically the Secretary of State). Either entity type can then elect S corp taxation.
If you form a corporation, you’ll file articles of incorporation, pay a state filing fee, appoint a registered agent, and create bylaws. If you form an LLC, the process is similar but uses articles of organization and an operating agreement. State filing fees vary widely, from under $50 to several hundred dollars depending on the state. Processing times range from same-day to several weeks, though most states offer expedited options for an additional fee.
During this step, you’ll also need an Employer Identification Number (EIN) from the IRS. You can apply for one free at IRS.gov/EIN, and you’ll receive it immediately if you apply online. You need the EIN before filing Form 2553.
Who Qualifies for S Corp Status
Not every business can elect S corp taxation. The IRS imposes strict eligibility rules:
- 100 shareholders or fewer. Members of the same family can be treated as a single shareholder for counting purposes, but you cannot exceed 100.
- Only certain types of shareholders. Shareholders may be individuals, certain trusts, and estates. Partnerships, other corporations, and non-resident aliens cannot be shareholders.
- One class of stock. You can only have a single class of stock, meaning all shares carry the same rights to distributions and liquidation proceeds. Differences in voting rights alone don’t create a second class.
- Domestic entity. The business must be organized in the United States.
If your ownership structure doesn’t fit these rules, such as having a foreign investor or a corporate partner, you’ll need to restructure before electing S corp status or stick with C corp or partnership taxation.
File IRS Form 2553
Form 2553, “Election by a Small Business Corporation,” is the document that tells the IRS you want S corp tax treatment. It’s a one-time filing, not something you repeat each year. Here’s what you’ll fill out:
Part I covers the basics. Enter the corporation’s legal name exactly as it appears in your charter or formation documents, your EIN, the date of incorporation, and the effective date of the election (the date the corporation first had shareholders, first had assets, or began doing business). You’ll also select your tax year. Most S corps use a calendar year ending December 31.
The shareholder consent section is critical. Every shareholder must sign the form or attach a separate written consent statement. For each shareholder, you’ll list their name, address, Social Security number or EIN, number of shares owned, and the date they acquired those shares. Missing even one shareholder’s signature can delay or invalidate the election.
An authorized corporate officer, such as the president, vice president, treasurer, or chief accounting officer, must sign and date the form.
Part II only applies if you’re requesting a fiscal tax year (one that doesn’t end on December 31). Most filers skip this section entirely.
How to Submit Form 2553
You have three options for submitting the form. You can mail the original (no photocopies) to the IRS service center assigned to your state. Businesses in the eastern half of the country generally mail to the Kansas City, MO center, while those in the western half mail to Ogden, UT. The exact address and your state’s assignment are listed in the Form 2553 instructions.
You can also fax the form. The IRS provides dedicated fax numbers for each service center (855-887-7734 for the Kansas City center, 855-214-7520 for Ogden). If you fax it, keep the original with your permanent business records. Certain IRS-designated private delivery services are a third option, listed at IRS.gov/PDS.
There is no online filing option for Form 2553.
Filing Deadlines
Timing matters. If you miss the deadline, your S corp election won’t take effect until the following tax year.
For a new business, you have 75 days from the date the corporation begins operations, acquires assets, or issues stock (whichever comes first) to file Form 2553. For an existing business that wants to switch to S corp status for the current tax year, the deadline is March 15. File after March 15 and the election takes effect the following January 1 for calendar-year filers.
If you missed the deadline, the IRS does offer late-election relief in certain situations, typically when you can show reasonable cause for filing late and the business has been operating as if the election were already in place. Late elections can sometimes be filed by attaching Form 2553 to your Form 1120-S (the S corp tax return).
State-Level Requirements
Most states automatically recognize your federal S corp election and don’t require separate paperwork. However, a few states require you to file a separate state-level S corp election form. Check with your state’s tax or revenue department to confirm whether an additional filing is needed.
Even in states that recognize the federal election automatically, S corps may still owe state-level taxes. Some states impose a franchise tax, a minimum tax, or a tax on S corp income above a certain threshold. Your state’s treatment of S corp income on your personal return can also differ from federal rules, so review your state’s tax guidance after making the election.
After the Election Is Approved
The IRS will send a confirmation letter (CP261) once your S corp election is accepted. This typically arrives within 60 days of filing. Keep this letter permanently. Banks, lenders, and state agencies sometimes ask for proof of your S corp status, and the CP261 is the easiest way to provide it.
Once the election is in effect, the corporation files Form 1120-S each year instead of the standard corporate return (Form 1120). The business itself generally doesn’t pay federal income tax. Instead, profits and losses flow through to shareholders’ personal returns via Schedule K-1, which the corporation issues to each shareholder. Shareholders then report that income and pay tax at their individual rates.
You’ll also need to set up payroll if any shareholders work in the business. The IRS requires shareholder-employees to receive a reasonable salary before taking additional distributions. This is one of the key mechanics that makes S corps attractive: only the salary portion is subject to Social Security and Medicare taxes, while distributions above that salary are not. Setting the salary too low, however, is one of the most common triggers for IRS scrutiny of S corporations.