Glossary
S-corp election (Form 2553)
The election that tells the IRS to tax a corporation or LLC as an S-corporation, with income passed through to owners and a payroll requirement for owner-employees.
Form 2553 is filed by the 15th day of the third month of the tax year it should apply to (March 16, 2026 for calendar-year 2026), signed by every shareholder. Late elections are routinely accepted with a reasonable-cause statement under Revenue Procedure 2013-30, often years later.
Eligibility rules matter: no more than 100 shareholders, all of them US citizens or residents (or certain trusts), one class of stock. A non-US owner cannot be an S-corp shareholder, which is why the election is not available to most foreign-owned LLCs. The election saves self-employment tax on distributions above a reasonable salary and adds payroll, a separate return and stricter bookkeeping.
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