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S-Corporation Tax Election – IRS Form 2553 – Small Business Tax Election

Are about to convert your company from a C-corporation to an S-corporation? Well, then it is important to know all about the IRS Form 2553, which is also called the subchapter S-election. It is needed by the IRS, where the S-corporations have to file it obtain the S-corporation status with the federal government for the taxation processes.

It is basically used to let the IRS know that you select to be taxed as an S-corporation from now on. For things like these, IncParadise can help you filing the form so that you can be taxed as an S-corporation. Our team would help you to fill the form along with the Articles of Incorporation.

The forms lets us know where each of the officers of the company and/or the shareholders of the company have to sign. Other than that, there is an addendum page in the IRS Form 2553 which gives the appropriate FAX number of the IRS office where the form would have to be submitted as soon as it has been filled. The IRS Form 2553 would then be submitted to the IRS office to obtain the small business tax election status from the IRS.

The confirmation that the IRS has received the form of the company’s election would be given to the company within a couple of days after the filing has been done. After that, within a couple of weeks, the company would the receive the confirmation about the IRS confirming that the S-corporation election of the company has been granted through the IRS Form 2553.

What is the “S Corporation Deadline?”

For a company that is already existing as a c-corporation and wants to select the status of being taxed as an S-corporation, the corporation has to file the IRS Form 2553 by March 15th. Moreover, if the corporation has already filed for the taxes on or after 1st January of the present tax year, then the S-Corporation election with the IRS Form 2553 can be submitted to the IRS within the tax year.

This is only possible as long as the filing is approved and received by the IRS no later than a 75-day period, which is after when the corporation has begun any of the following ventures that have been listed below (whichever is earliest):

  • Conducted business as a corporation
  • Acquired assets
  • Issued stock to shareholders

In case the S-Corporation electing is filed after the above-mentioned activities have taken place and a 75-day period has crossed, the S-Corporation status would still be elected. But in this case, the effect of the election would take place at the beginning of the next of the next calendar year.

Who Normally Selects the S Corporation Status?

Those entrepreneurs that select the s-corporation status for their business, have the following reasons:

  • The s-corporation permits all the shareholders in the company to easily avoid the “double taxation” that is normally placed on the shareholders of a c-corporation. This is since all the losses and income in an s-corporation is always reported as personal income in the tax returns of the s-corporation for the shareholders.
  • The IRS Form 2553 lets the company act as a s-corporation and this means that the company can then enjoy the advantages of an LLC, a corporation, a sole proprietorship, and a partnership all together in one entity.
  • Unlike the partners in a partnership and the sole proprietors, the s-corporation’s shareholders are usually given the same level of personal asset protection limited liability as are the shareholders of a corporation.

How can Inc Paradise help?

With the above explanation regarding what the IRS Form 2553 is all about and why do people choose it, you can now make a decision of you want to change into an s-corporation. And if you do, IncParadise can assist you in filling the IRS Form 2553 so that your company has the s-corporation election granted.

Other than that, IncParadise can assist you in registering your company with the government in Delaware and Nevada. There are many other services offered by Inc Paradise. Contact to know more!