This article will explain the benefits of filing an S-Corp election even if you are behind the deadline. If you need help handling this matter, ElectSCorp can help you get it all done. Otherwise, please read the content below for the instructions on how to do it on your own.
Converting a business structure to an S corporation allows company owners to avoid double taxation of earnings. Switching to an S-Corp means a corporation no longer pays taxes. Instead, the company owner and shareholders report company revenue as personal income.
Sometimes companies wait until the last minute during the fiscal year to request their C corporation status be changed to an S corporation. While not ideal, it also is not uncommon. Filing a late S-Corp Election need not be a difficult process when you follow the simple steps recommended in this piece.
There are several reasons why a company might miss the original IRS deadline for filing an S-Corp election. Two of the most acceptable scenarios include:
The IRS provides relief for late elections when corporations can prove that their failure to file by the deadline occurred for reasonable causes, such as the two above. When requesting relief on the grounds of reasonable cause, businesses must address the following points in their appeals to boost their chances of approval.
Companies that are late out of the gate should not panic. Their chances of being granted a late S-Corp election increase significantly when they follow these simple steps.
Officially called the “Election by a Small Business Corporation” form, 2553 can be filled out online or printed and completed by hand. Be sure to fill out all requested information on the form to prevent a delay in its processing. The most important details include the date of incorporation and the corporation’s fiscal year.
Whether it is filed late or on time, an S-Corp election form must be signed by an officer authorized to do business on behalf of the company, plus all associated shareholders.
Once completed and all authorized signatures have been obtained, Form 2553 must be filed with a corporation’s IRS Service Center. Companies must attach Form 2553 to the company’s current year Form 1120-S if it was filed within three years and 75 days after the intended date of S-Corp election. Businesses also can attach a late-filed Form 1120-S under the same period. When requesting IRS relief, corporations must state the following on the late-election form: FILED PURSUANT TO REV. PROC. 2013-30.
Never mail a late S-Corp election. File it in person directly with an IRS Service Center.
Corporations must wait to receive approval from the IRS before they can begin acting as an S-Corp. Until that time, businesses are not eligible to file S-Corp tax returns.
Companies that need assistance navigating a late S-Corp election can reach out to our team to schedule a consultation. Our knowledgeable experts can guide you through the process.