How to Make the S Corporation Election
All S Corporations begin their lives as C Corporations–no Secretary of State in the US makes a distinction between S Corporation and C Corporation. The S Corporation election is just that: an election.
The S Corporation Election is made by filing IRS Form 2553 before the expiration of the 15th day of the third month of its tax year (i.e. March 15 for most folks). If you are late, don’t fret, but get on it, there is a special precedure, but you’ll need to beg–search the net for that info if you need it.
Elegibility for S Corporation Election
But before you file for S Corporation status, make sure your corp is eligible; the corporation must:
- Have 100 or fewer shareholders.
- Be a US corporation.
- The shareholders can only be live people, estates, and limited types of exempt organizations (i.e., no C Corps can be shareholders.
- No nonresident alien shareholders.
- Only one class of stock.
- Not a bank, insurance company, professional corporation.