S Corp Election Guide

S Corp Tax Election
(Form 2553)

Potentially save thousands in taxes by electing S Corporation tax status for your LLC. We help you file Form 2553 with the IRS correctly and on time.

File S Corp Election
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At a Glance

5 key facts before you read on
Last updated April 2026
01
An S Corp election allows your LLC or corporation to be taxed as an S Corporation by filing Form 2553 with the IRS
02
Only your salary is subject to employment taxes -- distributions are not subject to the 15.3% self-employment tax
03
Form 2553 must be filed by March 15 or within 2 months and 15 days of formation for the current tax year
04
S Corps must pay working shareholders a reasonable salary and run payroll
05
S Corp taxation is generally beneficial for businesses with consistent profits of $40,000+ annually
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Tax Savings

How S Corp taxation saves you money

As an LLC owner, all your profits are subject to self-employment tax (15.3% for Social Security and Medicare). With S Corp taxation, only your salary is subject to employment taxes -- the rest can be taken as distributions.

For example, if your LLC earns $120,000 in profit:

Without S Corp Election

LLC Profit:$120,000
Self-Employment Tax (15.3%):$18,360

With S Corp Election

Reasonable Salary:$60,000
Employment Tax on Salary:$9,180
Distribution (no SE tax):$60,000
Potential Savings:~$9,180

Important Note

S Corp taxation isn't right for everyone. Consult with a tax professional to determine if it makes sense for your specific situation.

Advantages

Benefits of S Corp taxation

Why many profitable LLCs elect S Corporation tax status.

Reduce Self-Employment Tax

Only your salary is subject to employment taxes -- distributions are not subject to the 15.3% self-employment tax.

Pass-Through Taxation

Avoid double taxation -- profits pass through to your personal return like a partnership or sole proprietorship.

Keep LLC Protection

Maintain your LLC's limited liability protection while gaining tax advantages of S Corp status.

Credibility & Professionalism

S Corp status can add credibility with banks, investors, and business partners.

Evaluate

Is S Corp election right for you?

S Corp taxation makes sense for some businesses, but not all.

Good Candidates

  • Consistent profits of $40,000+ annually
  • Can pay a reasonable salary and still have distributions
  • Willing to handle additional compliance
  • Established, profitable service businesses

Things to Consider

  • Payroll requirements and costs
  • Additional tax filing (Form 1120S)
  • Reasonable salary requirements
  • State tax implications vary
  • Not beneficial for all businesses
  • May need accounting help
The Process

How we help you file

We handle the Form 2553 filing process from start to finish.

01

Evaluate Eligibility

We review your business to confirm it meets S Corp election requirements.

02

Prepare Form 2553

We prepare your Form 2553 with all required information.

03

File With The IRS

We submit your election to the IRS before the applicable deadline.

04

Receive Confirmation

Get your IRS acceptance letter confirming S Corp tax status.

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Common Questions

Frequently asked questions

Common questions about S Corp tax election

An S Corp election allows your LLC or corporation to be taxed as an S Corporation by the IRS. This is done by filing Form 2553. Your business entity doesn't change -- only how it's taxed. This can provide significant tax savings for profitable businesses.

S Corp taxation can reduce self-employment taxes. With an LLC taxed as a sole proprietorship, all profits are subject to self-employment tax (15.3%). With S Corp taxation, only your reasonable salary is subject to employment taxes -- the remaining profits are distributed as dividends, which aren't subject to self-employment tax.

Generally, S Corp taxation makes sense when your business is consistently profitable (usually $40,000+ in net income) and you can pay yourself a reasonable salary while still having significant profits to distribute. We recommend consulting with a tax professional.

To qualify, your business must be a domestic corporation or LLC, have only allowable shareholders (individuals, certain trusts and estates -- no partnerships or corporations), have no more than 100 shareholders, have only one class of stock, and not be an ineligible corporation.

To be effective for the current tax year, Form 2553 must be filed by March 15 (or the 15th day of the 3rd month of your tax year) OR within 2 months and 15 days of forming your business. Late elections may still be possible with reasonable cause.

S Corps must pay shareholders who work in the business a "reasonable salary" and run payroll (with payroll taxes). You'll also need to file a separate S Corp tax return (Form 1120S) annually. The added complexity is why this makes sense mainly for profitable businesses.

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Related resources

Annual Report Filing

Stay compliant with state filing requirements after your S Corp election.

Learn more

Registered Agent

Professional registered agent services for your S Corp.

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Certificate of Good Standing

Prove your business is in compliance with state requirements.

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with S Corp election?

Let us help you file Form 2553 and elect S Corporation tax status. We'll make sure it's done correctly and on time.

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