How to File an S Corporation Tax Election for Your LLC
Learn how to file Form 2553 to elect S Corporation tax treatment for your LLC. Covers eligibility, deadlines, what the form requires, and how Bizee can file it for you.
Bizee Editorial Staff
Editorial Team
Introduction
To file an S Corporation tax election for your LLC, you file Form 2553 with the IRS. The election changes how your LLC is taxed — not its legal structure — and can reduce the self-employment taxes you owe each year. The deadline is March 15 for a calendar-year election effective January 1.
What an S Corporation tax election is
An S Corporation tax election is a federal tax classification choice that lets your LLC be taxed like an S Corporation instead of a sole proprietorship or partnership. You file Form 2553 with the IRS to make the election. Your LLC's legal structure — and the liability protection that comes with it — stays exactly the same.
By default, a single-member LLC is taxed as a sole proprietorship and a multi-member LLC is taxed as a partnership. In both cases, all net profit flows through to your personal tax return and the full amount is subject to self-employment tax — currently 15.3% on the first $168,600 of net earnings. The S Corp election changes that math.
Why the S Corp election matters for LLC owners
The S Corp election matters because it can reduce the amount of your LLC's profit that is subject to self-employment tax. Under S Corp tax treatment, you split your income into 2 parts: a reasonable salary you pay yourself as a W-2 employee, and distributions of remaining profit. Only the salary portion is subject to payroll taxes — the distributions are not.
The savings add up once your net profit is high enough to justify paying yourself a reasonable salary and still have money left over. Most tax professionals suggest the election starts making sense somewhere in the range of $40,000–$60,000 in annual net profit, though the right threshold depends on your specific situation. A tax professional can help you figure out whether the numbers work for your business.
One thing that catches people off guard: the S Corp election does not eliminate your tax bill. It shifts part of your income out of self-employment tax territory. You still owe income tax on everything — salary and distributions alike.
How to file Form 2553
Filing Form 2553 is a 4-step process: check eligibility, gather the required information, complete and sign the form, and submit it to the IRS by the deadline. The IRS does not charge a filing fee for Form 2553.
Step 1: Check eligibility
Your LLC must meet the IRS eligibility requirements before you file. The main rules: no more than 100 shareholders or members, all shareholders must be U.S. citizens or resident aliens, no corporate or partnership shareholders, and only 1 class of stock (or membership interest with identical economic rights).
Step 2: Gather what you need
Form 2553 asks for your LLC's Employer Identification Number (EIN), legal business name, principal business address, and the date your LLC was formed or began operations. You'll also need information for every member: name, address, Social Security number, and ownership percentage. Every member must sign the form to consent to the election.
Step 3: Know the deadline
For a calendar-year LLC, the deadline to file Form 2553 and have the election take effect for the current tax year is March 15 — that's 2 months and 15 days after January 1. You can also file any time during the prior tax year. Miss the deadline and the election won't take effect until the following year.
If you miss the deadline, late election relief may be available under IRS Revenue Procedure 2013-30. This allows the S Corp election to be treated as timely if you can show reasonable cause for the late filing and meet the other requirements. A tax professional can help you figure out whether you qualify.
Step 4: Submit Form 2553
Mail or fax the completed Form 2553 to the IRS service center for your state. The IRS instructions for Form 2553 list the correct address and fax number based on your location. Keep a copy of the signed form and any IRS acknowledgment you receive — you'll need it if the IRS ever questions whether the election was filed.
Once the election is in effect, your LLC files Form 1120-S each year instead of a Schedule C or partnership return. You'll also need to run payroll for yourself and file quarterly payroll tax returns. These are the ongoing requirements that come with S Corp tax treatment — factor them into your decision before you file.
FAQ
Form 2553, Election by a Small Business Corporation, is the IRS form you file to elect S Corporation tax treatment for your LLC. It tells the IRS you want your LLC taxed as an S Corporation rather than as a sole proprietorship or partnership. There's no filing fee. You can download Form 2553 directly from the IRS website.
Form 2553 is the form you need. Filing it doesn't convert your LLC into a corporation — it changes how the IRS taxes your LLC. Your LLC stays an LLC under state law. If your LLC is currently taxed as a partnership and you want to first elect corporate classification before making the S Corp election, you may also need to file Form 8832.
For a calendar-year LLC, the deadline is March 15 of the year you want the election to take effect. You can also file any time during the prior tax year. If you miss the deadline, the election takes effect the following year — unless you qualify for late election relief under IRS Revenue Procedure 2013-30.
No. The S Corp election is a tax classification change, not a legal structure change. Your LLC keeps its limited liability protection after the election. Members are still shielded from personal liability for business debts and legal judgments in the same way they were before you filed Form 2553.
Yes. Multi-member LLCs can elect S Corporation tax treatment as long as the LLC meets the eligibility requirements: no more than 100 members, all members are U.S. citizens or resident aliens, no corporate or partnership members, and only 1 class of membership interest. Every member must sign Form 2553 to consent to the election.
Yes. A tax professional or a business formation platform can prepare and file Form 2553 on your behalf. Because the deadline is firm and a missed filing means waiting another year, having someone handle it for you reduces the risk of an error or a late submission. We offer S Corp election filing as a service if you'd rather not do it yourself.
Form 8832 is used to elect how your LLC is classified for federal tax purposes — for example, to be treated as a corporation instead of a partnership. Form 2553 is used specifically to elect S Corporation tax treatment. In most cases, an LLC filing for S Corp status files only Form 2553. Form 8832 is typically needed when an LLC wants C Corporation tax treatment, or in certain multi-step election scenarios.
