The 2553 form is used by the share holders of a corp. to elect S status with the IRS. The status provides limited liability protection for share holders and S-corp. Profits are passed directly to the personal tax returns of each share holder.
What is an S corporation?
The IRS defined an S corp which elects small business status. If you are choosing a business as a S corp, the owners have limited liability, and the profits are taxed on each share holder’s personal tax return.
S Corporation Requirements:
To select S corp. you must abide by the following:
- You must be a domestic corporation
- Must have 100 or fewer shareholders
- Only one class of stock
- Use a 31st December year-end-date
- No partnerships, corporations and non-resident as shareholders
What is the deadline for Filing a 2553 Form?
The deadline for filing 2553 form is:
- Not more than 2 months and 15 days after the beginning of the tax year the election is to take into effect
- At any time during the tax year preceding the tax year it is to take effect
What are the main things which are included on the Form 2553?
The organization lists the name, address, social security number and percentage of ownership of each shareholder. The 2553 form requires each shareholder to compliance to the S-corp selection by signing and dating the form.
Is the 2553 form required for anyone?:
The final criteria is that the company must use one of the following tax years:
- Fiscal year which concludes on December 31st
- Normal business cycle
- Instance of taxation for property ownership
- Year of assessment selected under the Section 444
- Fiscal year of 52 or 53 weeks is tied to the end of one of the years above
- Any other fiscal year for which the company declares it’s intent to conduct businesses