The IRS Form 2553 is the form that allows small businesses to register themselves as S corporations to save on small business taxes. Small businesses registered as S corporations can save on their taxes compared to C corporations.
This will also let them avoid double taxation as a C corporation, in which they are taxed at both the shareholder level and corporate level. Here are other details you may want to learn about IRS 2553 Form.
When Should You File IRS Form 2553?
According to the laws, you have to file Form 2553 at specific times to register as or be considered an S corporation. For example, you have to file the IRS 2553 Form between 15 and 60 days after the start of the tax year.
On the other hand, you can still file IRS Form 2553 late if you meet one of the following requirements:
- When all the shareholders report their income to register their company as an S corporation, and the corporation has proof of this,
- If the corporation has a reasonable explanation for not filing the form before the deadline.
It is worth noting that all businesses are set as C corporations by default when a small business registers. Therefore, most small businesses, especially ones that want to save on their taxes, need to file IRS Form 2553, Election by a Small Business Corporation, to register as an S corporation.