Form 2553
Definition
Form 2553 (Election by a Small Business Corporation) is the official IRS form used by an eligible entity—such as an LLC or a C-Corporation—to elect to be taxed as an S-Corporation. The form requires the signature of all owners (members/shareholders) and must be filed by a specific deadline to be effective for the current tax year.
Why it matters
Filing Form 2553 is the only way to obtain S-Corp status. Without this form, the IRS will tax your LLC as either a disregarded entity or a partnership by default. Because an S-Corp election can save thousands of dollars in self-employment taxes, ensuring Form 2553 is filled out correctly and submitted on time is a critical step in tax planning.
If you already filed Form 2553, see our guide on how to check if your S corp is active.
Example
Lisa's marketing LLC is generating $120,000 in net profit. She decides she wants to be taxed as an S-Corp to reduce her self-employment tax burden. She fills out Form 2553, indicating an effective date of January 1st, and faxes it to the IRS by the March 15 deadline. Several weeks later, she receives an acceptance letter (CP261) confirming her LLC is now an S-Corp for tax purposes.