Electing S-Corp status is one of the most impactful tax decisions a small business owner can make —
but timing and preparation matter. Use this checklist to make sure you're ready before filing Form 2553
with the IRS.
⚠ Deadline Alert: To be effective for the current tax year, Form 2553 must generally be filed
within 75 days of the start of the tax year (by March 16 for calendar-year businesses). Late elections may
still be accepted with reasonable cause — ask your CPA.
Step 1 — Confirm You're Eligible
Business is a domestic corporation or LLC treated as a corporationForeign entities are not eligible for S-Corp status
100 or fewer shareholdersSpouses and certain family members count as one shareholder
All shareholders are U.S. citizens or resident aliensNon-resident aliens cannot be S-Corp shareholders
Only one class of stockDifferences in voting rights are allowed; economic rights must be identical
Not an ineligible corporation (insurance company, DISC, certain financial institutions)
Step 2 — Confirm the Math Makes Sense
Net business profit is consistently above $40,000–$50,000/yearBelow this threshold, S-Corp costs often outweigh savings
You've run a tax projection comparing S-Corp vs. sole proprietor/LLCUse the calculator at accurataxllc.com/resources or book a call with Jim
You understand the ongoing costs: payroll processing, extra tax filings (Form 1120-S), state fees
Step 3 — Set Up Payroll
Determine your reasonable salaryMust be comparable to what you'd pay someone else to do your job
Obtain an EIN (Employer Identification Number) if you don't already have one
Set up payroll with a provider (Gusto, QuickBooks Payroll, ADP, etc.)
Register for state payroll taxes in Colorado (CDLE, CDOR)
Begin running payroll — at minimum quarterly, ideally monthly
Step 4 — File Form 2553
Complete IRS Form 2553 (Election by a Small Business Corporation)Available at irs.gov — your CPA can file this for you
All shareholders sign the consent statement on Form 2553
File by the deadline (within 75 days of tax year start, or by March 16 for calendar year)
Keep a copy of the filed form and IRS acceptance letter in your records
Step 5 — Ongoing Compliance
File Form 1120-S annually (S-Corp tax return, due March 15)
Issue Schedule K-1 to each shareholder each year
File quarterly payroll tax returns (Form 941)
Pay quarterly estimated taxes on pass-through income
Maintain separate business bank account and records
Document shareholder distributions separately from salary
Key Dates for Calendar-Year S-Corps
January 1
New tax year begins
March 15
Form 1120-S due (S-Corp tax return)
March 16
Deadline to elect S-Corp status for current year
April 15
Personal return due (Form 1040)
Quarterly
Estimated tax payments (Apr 15, Jun 16, Sep 15, Jan 15)
Ready to make the election?
Jim handles the entire S-Corp setup process — from filing Form 2553 to setting up payroll and ongoing compliance. Book a free call to get started.