Business Woman HeadshotAttention, people. If you want to have your company recognized as an S Corporation for the 2015 tax year, we’re coming up on an important deadline.

March 16, 2015 is the last day you can opt to convert your C Corp or LLC to an S Corp so that you can take advantage of the tax benefits of an S Corporation for 2015. You’ll need to fill out IRS Form 2553 (or have CorpNet handle it) in order to qualify.

What You Need to Fill Out on Form 2553

The form, like most IRS forms, sounds scarier than it is. You’ll need to provide some basic information about your company, including:

  • Contact info
  • Year you want the S Corp election to begin (2015)
  • Your tax year
  • Shareholder information
  • Reason for filing document late, if applicable
  • Information on your current corporation

Who’s Eligible for the S Corp Election

If, when you first started a business, you elected to be a sole proprietor, this doesn’t apply to you. But if you run a domestic corporation with no more than 100 shareholders, and your only shareholders are qualified individuals, estates, or exempt organizations, you’re eligible to change your status to S Corp.

Why You Want to Elect as an S Corp

If you’ve been operating as a different business structure, you might wonder about the benefits of S Corp election. First of all, if you operate as a C Corp, you’re paying more in taxes than you need to. C Corps are essentially taxed twice; first on profits for the company, then on dividends for shareholders. So you as the owner get two chunks taken out of your paycheck.

If you incorporate a business as an S Corp, on the other hand, you pay taxes once, and they’re passed through to your personal income tax paperwork. So you file once and pay once. Nice.

An S Corp provides the same liability protection of your personal assets as other structures (other than the sole proprietorship), so you’ll keep that benefit.

Keep in mind that if you miss this deadline, you’ll be taxed under your current business structure. If that’s a C Corp, you’ll be paying unnecessarily those extra taxes. So get your form in, or let us handle the work for you.