INSTRUCTIONS : ELECTION BY A SMALL BUSINESS CORPORATION (Form 2553)
Form 2553 is a United States Internal Revenue Service tax form used for small businesses to elect tax designation as an “S” corporation. In order to qualify as an “S” corporation, your business must not pay federal income tax, but instead pass on income tax through to the shareholders.
The Form 2553 can be obtained through the I.R.S’ website or by obtaining the documents through a local tax office.
The tax form is to be filed by a corporate tax payer at any time in order to register as an “S” corporation for federal tax purposes.
1. First, enter the corporation’s name and contact information in the first box at the top of the form. Include the address of the corporation, employer identification number, date and state of incorporation.
2. In box E, select the tax year for which the corporation is claiming “S” designation. If it is your first year of incorporation, start with the date of the shortened tax year.
3. Make an election in box F for the tax year that you wish your corporation to be taxed on. You can select the standard calendar year, a fiscal year, or any specific 52 – 53 week period of your choosing.
4. In box G, check the box if you have over 100 shareholders but are accounting for family members as a single shareholder. Consult the instructions if you are unsure of what qualifies as family shareholders.
5. Supply a contact in boxes H and I if a representative should be contacted in regards to your corporation’s tax status.
6. If you have missed a deadline filing the Form 2553 and are filing a “C” corporation 1120 tax filing, you must state the reason for the missed deadline and supply supporting documents.
7. Sign and date the bottom portion of the first page.
8. For part I on the second page, you must list every shareholder, indicating their approval of the S corporation designation. You must also provide each shareholder’s stock ownership, social security number, and shareholder’s tax year.
9. Further complete the selection of fiscal tax year in part II, if applicable to your tax filing.
10. You can also elect to qualify as a Sub-chapter S Trust under 1361(d)(2), in which case you would fill out part III.
11. Once completed, your “S” corporation election can be sent to the IRS for evaluation. Save a copy for your records and for each shareholder’s record.
