What Is a IRS form 2553?
Businesses can file IRS Form 2553, Election by a Small Business Corporation and elect to form an S corporation instead of a C corporation. Form 2553 allows a small business to register as an S corp rather than a C corp, and this comes with significant tax benefits that can save your company money during tax season.
Who needs to fill out form 2553?
As a small business owner, your tax classification isn’t set in stone. So if you want your business to be taxed as an S corp, you’ll have to fill out IRS Form 2553. You can make this request as long as you’re a C corporation, single-member LLC, or multi-member LLC.
What is the 2553 form for LLC?
What is Form 2553? Form 2553 is the IRS Election by a Small Business Corporation form. Any small business that can be treated as a corporation (LLC or corporation) by the Internal Revenue Service (IRS) can use the form to elect to be taxed as an S corporation (S corp).
Should I change my LLC to an S corp?
From a tax perspective, it makes sense to convert an LLC into an S-Corp, when the self-employment tax exceeds the tax burden faced by the S-Corp. In general, with around $40,000 net income you should consider converting to S-Corp.
Can I change my LLC to an S-Corp?
You can switch your limited liability company’s (LLC) tax status to an S corporation, provided it meets the Internal Revenue Service’s (IRS) requirements. You don’t have to change your business structure, but you’ll need to file a form with the IRS.
Does LLC have to file both 8832 and 2553?
As discussed earlier, it is not necessary to file both Form 8832 for a newly formed entity to elect to be treated as an association taxed as a corporation and Form 2553 to elect S corporation status. Instead, a single election can be made on Form 2553.
Can a single member LLC make an S election?
As a single member LLC, you can elect to be taxed as an S-Corp as long as the election is made no more than two months and 15 days after the beginning of the tax year you want the election to go into effect. You make the election on form 2553.
Do I have to file a 2553 every year?
How Often Do I Need to File Form 2553? Once a small business files Form 2553 and is approved by the IRS to be treated as an S Corp, the election remains valid, and the business owner does not have to file Form 2553 every year.
Why would an LLC make an S corp election?
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.
Should I elect S-Corp status for my LLC?
Can an a corporation file Form 2553 retroactively?
A corporation can file Form 2553 after the due date and still receive IRS approval to make the election retroactive to the beginning of the corporation’s tax year.
When do I need to obtain IRS consent for a 2553 Election?
IRS consent generally is required for another election by the corporation (or a successor corporation) on Form 2553 for any tax year before the 5th tax year after the first tax year in which the termination or revocation took effect. See Regulations section 1.1362-5 for details.
What is Form 2553 and how does it work?
Form 2553 notifies the IRS that you want to elect S corp status. Upon receipt and review, the IRS will then send a letter to your corporation confirming its election for this tax treatment or denying your request.
Where are the Department of the Treasury Section references for Form 2553?
(For use with the December 2017 revision of Form 2553, Election by a Small Business Corporation) Department of the Treasury Internal Revenue Service Section references are to the Internal Revenue Code unless otherwise noted. Future Developments