S corporation election
A federal tax status, not a separate company. An eligible US corporation, or an LLC taxed as a corporation, files Form 2553 for pass-through taxation, so profits are taxed on the owners' own returns.
- Entiva fee to form
- $99
- Government fees to form
- $109
- Run plan
- $39 a month
- Steps to form
- 6
- Ongoing filings
- 9
- Ways to close
- 2
Who it suits, and what defines it.
The facts that decide whether it fits.
Who it suits
- Companies with up to 100 eligible shareholders that want pass-through taxation.
- Not for most foreign founders: nonresident aliens cannot be shareholders.
Key facts
- Type
- A federal tax status, not a separate entity
- Open to
- Eligible US corporation, or LLC taxed as a corporation
- Election form
- Form 2553
- Shareholder limit
- 100 (a married couple counts as one)
- Nonresident aliens
- Not allowed as shareholders
- Annual return
- Form 1120-S
- Tax law
- Internal Revenue Code Subchapter S, §§1361-1379
- State tax
- Most states follow; some tax the entity or need an election
What the law requires.
6 rules, each in plain words.
Form 2553 filed by the deadline
The deadline is 2 months and 15 days after the start of the tax year the election takes effect, or any time in the preceding tax year.
Consent from every shareholder
Nonresident aliens (foreign nationals who are not US tax residents) cannot be shareholders, so this does not suit most foreign founders.
An annual Form 1120-S
It is due the 15th day of the 3rd month after year end.
No more than 100 shareholders
A married couple counts as one.
Only eligible shareholders
These are individuals, estates, certain trusts and certain exempt organisations.
One class of stock
Differences in voting rights are disregarded.
How Entiva forms it.
6 steps. Entiva prepares and files each one, and collects every signature the law needs.
The steps
6 steps- 1Form the corporation or LLC first
The S election sits on top of a corporation, or an LLC taxed as a corporation.
- 2Obtain the company's EIN (US tax number)
Online if the responsible party (named on the form) has a Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN).
- 3File the 83(b) election if shares vest
Needed if founder shares vest. Due within 30 days of the share grant and cannot be made late.
- 4File Form 2553
Due no more than 2 months and 15 days after the start of the tax year it takes effect, or any time the year before. Every shareholder signs a consent.
- 5Register for state taxes and payroll
States may need to recognise the S status. Some need their own election or composite filings (one filing covering several owners).
- 6Authorise Entiva to deal with the IRS
Form 2848 lets Entiva represent the company with the IRS. Form 8821 only gives access to tax information.
Documents
6- Form 2553, Election by a Small Business Corporation
- Signed Form 2553 with every shareholder's consent
- Board resolution authorising the election
- Reasonable-cause statement, only for a late election
- Fax or mailing confirmation
- IRS acceptance or rejection letter
Who takes part
2- An authorised officer verifies identity and address, then signs by hand
- Every shareholder verifies identity and signs a consent
What has to be filed, and when.
Entiva tracks every deadline from the day it is formed, and files before each one.
Every year, and as things happen
9 filings- File Form 1120-S and K-1s (each owner's profit share)
15th day of the 3rd month after year end (March 15 for a calendar year)
- Extend the filing deadline (optional)
By the original due date; adds 6 months
- File Forms 1099 for contractor payments
January 31 each year for Form 1099-NEC, to the IRS and to recipients
- File Forms 1042 and 1042-S for payments to foreign persons
March 15 each year, if you make such payments
- File the FBAR (foreign bank accounts)
April 15, with an automatic extension to October 15, if you hold foreign accounts
- Prepare the year-end accounts
Each year, before the Form 1120-S
- File Form 3921 for incentive stock option exercises
January 31, to the employee, for exercises in the tax year
- File the BEA BE-15 annual survey
May 31, if it applies
- File the BEA BE-605 quarterly report
30 days after quarter end (45 days for the last quarter), if it applies
The changes Entiva handles.
Each change is prepared, approved, signed and filed.
The most common changes
10 changes- Declare a dividend
- Repurchase shares
- Retire shares
- Request an independent 409A valuation before option grants
- Ratify a defective stock issuance
- Change the IRS responsible party
- Change the IRS address
- Authorise a new IRS representative
- Designate preferred stock (risks a second class of stock)
- Correct an error in a filed document
How it closes.
2 routes. The right one depends on whether it can pay its debts, and who starts it.
Revocation or end of S status
When the shareholders choose C status or an eligibility test fails.
- 1
Send a revocation statement to the IRS
- 2
File short-year returns for the S and C periods
Closing with the underlying company
When the corporation or LLC dissolves.
- 1
Notify the IRS on Form 966
- 2
File the final payroll returns
- 3
File the final federal tax return
- 4
Deactivate the EIN
What Entiva does for you.
From the first filing to the last.
S corporation election
- Checks that every shareholder is eligible and works out the Form 2553 deadline.Formation
- Prepares Form 2553 and sends it by fax or mail after the officer signs by hand.Formation
- Prepares the year-end accounts that feed the Form 1120-S.Ongoing
- Prepares and e-files the Form 1120-S after the officer signs by PIN.Ongoing
- Files Form 2848 or Form 8821 so Entiva can deal with the IRS for the company.Ongoing
- Prepares the 83(b) election, collects the founder's signature and mails it within 30 days of the share grant.Formation
Build it with the API.
Every step on this page is an action in the Entiva API, with its documents, signatures and filing.
What it costs, item by item.
Every Entiva fee and every government fee, from forming it to closing it.
Forming it
$99one-off
- Government fees
- $109
Closing it
From $299
- Entiva fee
- Fixed, quoted first
- Government fees
- At cost
Included in the Run plan
- File Form 1120-S and K-1s (each owner's profit share)
- Extend the filing deadline (optional)
- File Forms 1099 for contractor payments
- File Forms 1042 and 1042-S for payments to foreign persons
- Prepare the year-end accounts
- Routine changes
- Every deadline tracked
Extra, at a fixed fee
- File Form 2553
- Register for state taxes and payroll
- File the FBAR (foreign bank accounts)
- File the BEA BE-15 annual survey
- File the BEA BE-605 quarterly report
- Request an independent 409A valuation before option grants
- Ratify a defective stock issuance
Each extra is quoted before it starts, and nothing is done until you approve it.
Forming it
Entiva's formation fee is $99, one-off. Government fees are passed through at cost.
DE expedite: 24-hour $50, same-day $100, 2-hour $500, 1-hour $1,000. WY $100.
Federal figure: no fee. $6,200 user fee only for a business-purpose tax year request.
Excludes steps marked only if needed.
Every year
The Run plan costs $39 a month ($468 a year).
Changes
Routine changes are included in the Run plan.
Optional preclearance $1,500.
Delaware corporations: $199, $214, $234, $259, $224, $2,599. Delaware LLC $220; LP/LLP/GP $200; statutory trust $500. Wyoming $60, $25.
Closing it
Closing is a fixed-fee project, quoted before it starts.
Entiva fees are in US dollars. Government fees are in the currency each authority charges, passed through at cost when the filing is made. Taxes are separate.
Start with your first company.
We are onboarding a small group of founders and finance teams with entities in more than one country.