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What are the requirements for an S-Corp Election?
What are the requirements for an S-Corp Election?
Updated over a month ago
  1. US Citizenship / Residency: Shareholders must be U.S. citizens or residents, and certain entities like trusts and estates are also allowed. Corporations, partnerships, and non-resident aliens cannot be shareholders.

  2. Eligible Entity: The business must be a domestic corporation or LLC that is eligible to elect S-Corp status.

  3. Shareholder Limit: The company can have no more than 100 shareholders. Corporations, partnerships, and non-resident aliens cannot be shareholders.

  4. One Class of Stock: S-Corps can only issue one class of stock, meaning all shares must have identical rights to distributions and liquidation proceeds (though voting rights can differ).

  5. Consent from All Shareholders: All shareholders must consent to the S-Corp election by signing Form 2553.

  6. Timely Filing of Form 2553: You must file Form 2553 with the IRS no later than 75 days after the start of the tax year in which you want S-Corp status to take effect.

Meeting these requirements is essential for successfully electing and maintaining S-Corp status.

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