S corporation guides
How to start an S corp in any state.
Form an LLC or corporation, then elect S status with the IRS. Each guide covers the state filing, Form 2553, any state election, payroll and what the state taxes.
Weighing S corp against C corp? Compare them side by side
The process
Six steps to S corporation status.
The federal election is the same everywhere. The entity you form and how your state treats it are what change.
- Form an LLC or corporationFile with your state and pay the state fee.
- Get an EINThe IRS needs it on Form 2553.
- File IRS Form 2553Within 2 months and 15 days of the tax year's start.
- Handle any state electionMost states follow the federal election; a few don't.
- Run payrollPay working owners a reasonable salary.
- File Form 1120-SBy March 15 for a calendar year, with K-1s for owners.
State rules worth knowing
Where the state election differs.
Separate state election required
These states don't accept the federal election alone. File the state's own form too; the guide names it.
State tax on S corporations
Some states tax S corporations at the company level, through a franchise tax, a minimum tax or a business profits tax, even though federal tax passes through. Each state guide spells out what applies there.
Annual reports and franchise taxes, explainedRead next
From the Journal
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S corporation questions, answered.
Can't find your answer? Call us at 801-477-5991 or ask our AI assistant.
Is an S corp a type of business entity?
No. An S corporation is a federal tax status. You form an LLC or a corporation with your state, then elect S status by filing IRS Form 2553. The legal entity doesn't change; only how it's taxed does.
When does an S corp election save money?
When the business earns comfortably more than a reasonable salary for the work you do. Owners pay payroll taxes on that salary, but profit paid out beyond it as distributions isn't subject to self-employment tax. Below that point, the added payroll and tax-prep costs can outweigh the savings.
When is Form 2553 due?
To cover the current tax year, file no more than 2 months and 15 days after the tax year begins, or any time during the year before. For an existing calendar-year business, that's March 15. The IRS grants late-election relief in many cases with reasonable cause.
Who can be an S corporation shareholder?
Up to 100 shareholders who are U.S. citizens or residents, plus certain trusts, estates and tax-exempt organizations. Partnerships, corporations and nonresident aliens can't own S corporation shares, and there can be only one class of stock.
Do states recognize the S corporation election?
Most states follow the federal election automatically, but a few require their own state election, and some tax S corporations at the entity level anyway. Each state guide explains how that state treats S corporations.
Can a single-member LLC be an S corp?
Yes. A single-member LLC can elect S corporation taxation by filing Form 2553, as long as the owner is an eligible shareholder. The owner then pays themselves a reasonable salary through payroll.
Ready to set up your S corp?
About ten minutes, from $0 plus your state fee.