S-Corporation Election (IRS Form 2553) Filing Service

What does an S corp election do for an Ohio LLC?

An S corporation election is a federal tax choice. The business files IRS Form 2553, and if the IRS accepts it, the company is taxed under Subchapter S of the Internal Revenue Code. It does not create a new company, and it does not change anything on the Ohio Secretary of State's record.

That point confuses a lot of owners. An Ohio LLC that elects S corp status is still an Ohio LLC. It keeps its articles of organization, its operating agreement, its Ohio entity number, and its statutory agent. Its name still ends in "LLC". What changes is how the IRS treats its income and how the owners get paid.

Owners usually consider the election because of self-employment tax. In an S corporation, owners who work in the business are paid a salary through payroll, and profits beyond that salary are handled differently. Whether that saves money depends on the numbers: how much the business earns, what a reasonable salary looks like for the work, and what payroll and bookkeeping will cost. That is your accountant's call, not ours, and not a website's.

If your accountant says yes, the rest is paperwork with a deadline. We handle the paperwork.

Can an Ohio LLC elect S corporation status?

Yes. The IRS lets a domestic corporation, or a domestic entity eligible to elect to be treated as a corporation, file Form 2553. An Ohio LLC is that second kind of entity. An LLC that meets the S corporation tests and files a timely Form 2553 does not need to file Form 8832 first. The 2553 is enough.

The IRS eligibility tests

• The business is a domestic corporation or a domestic entity eligible to elect corporate treatment
• It has no more than 100 shareholders (for an LLC, the members count as shareholders)
• Its only shareholders are individuals, estates, certain exempt organizations, or certain trusts
• It has no nonresident alien shareholders
• It has only one class of stock
• Every shareholder consents to the election

A few of these catch Ohio LLCs off guard. An LLC with a member that is a corporation or a partnership fails the shareholder test, since only the listed types can hold shares. So does an LLC with a member who is a nonresident alien. And an operating agreement that gives some members different rights to distributions or liquidation proceeds can raise a one-class-of-stock question. If any of that describes your company, have your accountant or attorney look before you file.

What is the S corp election deadline?

The IRS deadline is no more than 2 months and 15 days after the beginning of the tax year the election is meant to take effect. The election can also be filed at any time during the tax year before that.

When does a new company's first tax year begin?

For a new entity making the election for its first year, the IRS uses the earliest of three dates as the effective date on line E of Form 2553: the date the entity first had shareholders or owners, the date it first had assets, or the date it began doing business. For a new Ohio LLC, that is often the formation date or close to it. Count from that date, not from the day you opened a bank account or landed your first customer.

Because the window runs from an exact date, the safest move is to decide before you form, or right after. If you form in the spring and only start talking to an accountant in the fall, the first-year window may already be closed.

What if you missed the S corp deadline?

Missing the deadline is common, and the IRS has a procedure for it. Under Revenue Procedure 2013-30, a business may get relief for a late election if the failure to file on time was due to reasonable cause and the Form 2553 is filed within 3 years and 75 days of the effective date the business wants.

• The form must say "FILED PURSUANT TO REV. PROC. 2013-30" at the top of the first page
• The business must explain the reasonable cause for filing late, on line I or in an attached statement
• It must show it acted diligently to correct the mistake once it was discovered
• Shareholder statements are required, which completing the consent column on the form can satisfy

Late relief is a tax judgment as much as a filing. Whether your reason counts as reasonable cause, and whether tax returns already filed for those years need attention, are questions for your accountant. If your accountant decides a late election is the right move, we prepare the form with the required heading and statement, and your accountant reviews the explanation before it goes out.

Who signs IRS Form 2553?

Two kinds of signatures go on Form 2553, and missing either one is the most common way an election fails.

The officer's signature

A corporate officer signs and dates the form: the president, vice president, treasurer, assistant treasurer, chief accounting officer, or another officer authorized to sign. For an LLC, that is the member or manager authorized to sign for the company. The IRS is blunt about it: if Form 2553 isn't signed, it won't be considered timely filed.

The shareholder consents

Every shareholder has to consent. If the election is filed before the effective date, the shareholders who own stock on the filing date consent. If it is filed after the effective date, everyone who owned stock at any point from the effective date through the filing date must consent, including an owner who has since left. When an individual and a spouse have a community property interest in the shares, both consent.

In a multi-member Ohio LLC, that means every member signs. We prepare the consent section and send it for signature; the election does not go to the IRS until every consent is in.

What happens after Form 2553 is filed?

Form 2553 goes to the IRS by mail or fax, or by an IRS-designated private delivery service, at the address the instructions list for the state where the business is located. We file by fax and keep the transmission confirmation, which is your proof of the filing date if the IRS ever questions timeliness.

The IRS says a business should generally hear back within 60 days. If there is no word within 2 months of filing, or 5 months if box Q1 was checked, the instructions say to call the IRS at 1-800-829-4933. The acceptance letter, the CP 261, goes in your portal when it arrives.

Things that do not change

• Your EIN. The IRS says an LLC or corporation that elects S corporation status keeps its existing EIN.
• Your Ohio filings. The Secretary of State record, the articles, and the entity type stay the same.
• Your statutory agent. The agent appointment is tied to the Ohio entity, not to its tax election.

What does change is mostly on the payroll and bookkeeping side, starting with the first tax year the election covers. Your accountant will set that up. Keep the fax confirmation and the CP 261 together with your formation papers. Banks, lenders, and future accountants sometimes ask for proof of the election, and a business that cannot find its acceptance letter years later has an avoidable problem on its hands.

An S corp election timeline for a new Ohio LLC

For a brand-new company, the first-year deadline comes up fast. Here is the order that keeps it from slipping past.

1. Talk to your accountant about S status before or right after you form, not at tax time
2. File the Ohio articles of organization with the Secretary of State and name your statutory agent
3. Get the EIN, since Form 2553 asks for it
4. Pin down the effective date: the earliest date the LLC had owners, had assets, or began doing business
5. Count 2 months and 15 days from that date and put the deadline on the calendar
6. Collect every member's consent and the authorized signature, then file Form 2553
7. Set up payroll with your accountant for the first year the election covers

Steps two and three take days, not weeks, when they are handled together. The waiting tends to happen at step one, when owners put off the conversation with their accountant. If the window closes, the late election procedure may help, but a timely filing is simpler and leaves nothing for the IRS to second-guess.

Questions to ask your accountant before you elect

We do not give tax advice, and we will not tell you whether S status makes sense. But we can tell you what owners commonly ask their accountant before they decide, so you get more out of that conversation.

• At my expected profit, does the election save more than the added payroll and tax-prep cost?
• What would a reasonable salary be for the work I do in the business?
• Which tax year should the election start, and is it too late for this one?
• How do Ohio and my city treat an S corporation's income compared with my current setup?
• Does our operating agreement need changes to fit the one-class-of-stock rule?
• If we elect now and the numbers change, what does it take to undo it later?

Bring the answers back to us with the tax year you want the election to start, and we take it from there.

How our S corp election service works

Start with your accountant. Once the answer is yes, send us the EIN, the filed articles, every owner's name, address, and ownership percentage, and the tax year the election should start. Taxpayer IDs are collected securely after you order. We email a secure card link for our $100 fee. There is no IRS fee.

We prepare Form 2553, send the consent section to every shareholder for signature, and fax the completed form to the IRS with proof of transmission. The IRS acceptance letter goes in your portal when it arrives, usually about 60 days later. Questions first? Call (877) 908-6122, Monday to Friday, 9:00 AM to 5:00 PM ET.

Still forming the company? We can file your Ohio articles and obtain the EIN first, which keeps the first-year deadline in view from day one. Every Ohio LLC and corporation also needs a statutory agent on record; our Ohio statutory agent service is $49 a year.