If you want your business to be treated as an S Corporation, you must file Form 2553–Election by a Small Business Corporation to IRS timely. The deadline for filing Form 2553 differs depending on your business situation.
For an existing corporation that is converting to S-Corp, the S-Corp election can be filed:
- Any time during the year preceding the first tax year of the S-Corp; or
- On or before the 15th day of the third month of the first tax year of the S-Corp.
Example: Your corporation has been in business for many years and now you want to convert it to an S-Corp effective January 1, 2022. In this case, you can file the S-Corp election any time during 2021 or file the election by March 15, 2022.
Newly formed corporation
For a newly formed corporation, the S-Corp election must be filed on or before the 15th day of the third month of the first tax year.
Example: Your corporation was founded and began business on June 16, 2021, and you want the S-Corp status be effective on that date. In this case, you must file the S-Corp election during the period from June 16, 2021 to August 30, 2021.
Late filing of S-Corp election
If you cannot file the election timely due to reasonable causes, you can file the election after the deadline. In this case, you must explain the reasonable causes for late filing and your diligent actions to correct the mistake upon discovery. The IRS will review your reasonable causes and may or may not accept the election.
Filing an S-Corp election is not a complicated task, but it is very easy to make mistakes that could result in denial from IRS. Therefore, it is a good practice to let a professional CPA firm handle this task for you.