Form 2553 is an IRS tax form used by eligible small business corporations to elect S corporation status for federal income tax purposes. By filing Form 2553, a qualifying corporation can choose to be treated as an S corporation, allowing it to pass through

  • Income
  • Losses
  • Deductions
  • Credits

to shareholders, resulting in significant tax savings for the business owners. You must file this form within specific timeframes and meeting certain eligibility criteria outlined by the IRS.

Where to file form 2553?

You should file Form 2553 with the IRS within 75 days of the business’s formation or the beginning of the tax year in which the election is to take effect. It can be submitted online, by mail, or by fax.

Online filing

Businesses must have an EIN (Employer Identification Number) and meet specific eligibility criteria to file Form 2553 online. The online filing process is quick and efficient, with a confirmation receipt provided upon successful submission.

Mail or fax filing

If the business does not meet the requirements for online filing, it can submit Form 2553 by mail or fax. But, it’s important to note that mailed forms may take longer to process and may be lost in the mail. You can find the fax number and mailing address for Form 2553 on the official IRS website.

Benefits of filing Form 2553

The most important benefits of filing Form 2553 as an S corporation depend on the business’s and its owner’s specific needs and circumstances. But, the benefits below are generally considered the most critical for small businesses when deciding to file Form 2553:

  • Pass-Through Taxation: This is often regarded as the most important benefit, as it avoids double taxation and can result in substantial tax savings for shareholders.
  • Limited Liability Protection: Shielding personal assets from business liabilities is crucial for protecting shareholders’ financial interests and minimizing risk.
  • Tax Savings and Retirement Planning: The potential for tax savings and retirement planning opportunities can significantly impact shareholders’ financial well-being and long-term financial goals.
  • Access to Capital: Offers the ability to attract investors through ownership interests in shares of stock can facilitate business growth and expansion.
  • Credibility and Perception: Enhancing the business’s credibility and perception can lead to increased trust and confidence from customers, vendors, and partners, ultimately contributing to business success.
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