How to Fill in Form 2553 Election by a Small Business Corporation S Election

I’m going to walk you through preparing the form 2553 to make the S corp election.

So this is the IRS Form 2553 Election by a Small Business Corporation, otherwise known as an S corp. There’s a couple of pages to this form, but you’re really only going to look at the first two pages, most likely.

So let’s scroll back up to the top. So here you’ve got the name and this should be the business name that you registered with both your state and with the IRS. So I’m just going to make up this information for argument’s sake here. ABC Corporation, Inc. And you should have also gotten an identification number as part of setting up your business. And again, I’m going to make this number up. And all of this needs to match. So it needs to match the state information. It needs to match the IRS and federal information. Otherwise, you’re going to have paperwork problems when you submit this.

And the date incorporated, again, this is going to match your state information. And your state. Now, if you want to change the name or address, you can click these boxes, but for now, we’re just going to use the information and say that it matches what we already filed.

So this is where you’re going to pick the effective date. And there are some rules as to when you are going to have your S election go in place. Generally, it’s either going to be the date that you started business, if it’s a brand new business. Or it’s going to be the beginning of the next year. So if you are in your second, third or fourth year of business, and you say, “Hey, now is the time that I want to become an S corporation,” you would do next year’s January 1 date. I’m going to say that actually I’m just starting this year, so I’m going to say it’s as of my date of incorporation. Generally, you’re going to have a calendar year, for most people watching this. There are other year ends you can have, but for most companies, it’s a calendar year. So you can kind of ignore box 2, 3, or 4.

In the previous video, I said that you can’t have more than 100 shareholders. So here you go. This is your warning. And who is the IRS able to call? You can have this be yourself, if you’re the owner. You can have this be your CPA. It could be your lawyer. I’ve put my name down for some of my clients, and I’ve never actually gotten contacted by the IRS about it. So we’re just going to make up a name and a phone number just for argument’s sake.

Now this next part for late election. If you’re filing this after the fact, and you’re not making a timely election, that’s something you’re going to want to go ahead and speak with your CPA about, because this gets a little tricky. So we’re going to go through a scenario here where you’re not filing late. Again, I said before, our date of incorporation, date of effective date is all in line. We’re going to say, we’re not filing late.

Then you’re going to come down here. You’re going to sign it. You’re going to type in your title. It’s probably president or something like that. And you got to sign this and date it.

And now you’re going to move to the next page. This is where you start with the owner information and it pretty much lays out what goes in each box right up here. So we’ll use Joe Smith again and maybe he also lives where he works. It’s not that unusual. Any town, Florida.

Now here, you got this whole little paragraph here. Make sure you read this. You shouldn’t sign anything that you don’t read first. But basically you’re consenting to make the S election as an owner. So you would sign there. You would put the date in here. If you’re the only owner, you can go ahead and just put 100, you own 100%. And since this is a brand new company, the date we acquired the shares is the date it was formed.

Here you’re going to put your social security number. I’m making one up for the purpose here of just having something. And the shareholder’s tax year. Individuals, it’s always 12/31. There’s no other year, you can’t have a fiscal year as a person. So for every owner, you’re going to go through this process, make sure everything is signed. Unsigned forms will get rejected and sent right back to you. And that’s kind of all you need to worry about.

There are more pages, as you can see. There’s all kinds of stuff. It’s really not going to really apply in most situations. In my other video, I mentioned that certain types of trusts can be an owner. That’s where you get into it here, Qualified Subchapter S Trust. If you’re just setting up your own business, you don’t need to worry about that.

And then this is about the late election, which I said before, contact your CPA if you’re in a late filing situation. But it’s really not that complicated, as you can see. It’s owner information and basic information about the business itself. And that’s pretty much it. You print this out, you sign it and you send it off to the IRS.

I hope you find this helpful. If you have questions about filing S corporation elections, please feel free to contact me. Also subscribe if you’re enjoying these videos and we’ll keep giving you useful information. Thanks.