--- title: Operations and Filing Taxes as an S Corporation description: This article covers the basics of becoming an S Corporation, including the election process for business tax purposes. image: https://media.insognacpa.com/hubfs/S%20Corp%20Tax%20Filing.png --- [![Insogna logo small](https://media.insognacpa.com/hs-fs/hubfs/Insogna%20logo%20small.png?width=300&height=73&name=Insogna%20logo%20small.png "Insogna logo small")](https://insognacpa.com/) [![Insogna logo small](https://media.insognacpa.com/hs-fs/hubfs/Insogna%20logo%20small.png?width=300&height=73&name=Insogna%20logo%20small.png "Insogna logo small")](https://insognacpa.com/) [![Insogna logo small](https://media.insognacpa.com/hs-fs/hubfs/Insogna%20logo%20small.png?width=300&height=73&name=Insogna%20logo%20small.png "Insogna logo small")](https://insognacpa.com/) [![Insogna logo small](https://media.insognacpa.com/hs-fs/hubfs/Insogna%20logo%20small.png?width=300&height=73&name=Insogna%20logo%20small.png "Insogna logo small")](https://insognacpa.com/) Content Title Description < Previous page Next page > [Why Us](https://insognacpa.com/why-us) | [Business Accounting](https://insognacpa.com/business-accounting) | [Fractional CFO](https://insognacpa.com/fractional-cfo) | [Minimizing Taxes](https://insognacpa.com/tax-strategy/) [Building Wealth](https://insognacpa.com/building-wealth) | [Learning Center](https://insognacpa.com/learning-center)| [Contact Us](https://insognacpa-6129290.hs-sites.com/en-us/contact-us) [Tax](https://media.insognacpa.com/blog/tag/tax) [S Corp](https://media.insognacpa.com/blog/tag/s-corp) # Operations and Filing Taxes as an S Corporation By [Chase Insogna, CPA](https://media.insognacpa.com/blog/author/chase-insogna-cpa) Oct 11, 2022 3:35:43 PM 2 Minutes Read Business owners often wonder which business entity makes the most sense for their situation. An S Corporation is a popular choice because it offers both personal liability protection and certain tax benefits for corporate and personal income tax. This article covers the basics of becoming an S Corporation, including the election process for [business tax](https://insognacpa.com/tax-preparation/) purposes. *1) How to Become an S Corporation* *2) S Corporation Business Operations* ![making losses work](https://media.insognacpa.com/hs-fs/hubfs/making%20losses%20work.png?width=479&height=300&name=making%20losses%20work.png) ## 1) How to Become an S Corporation Two business entities can elect to file business taxes as an S Corporation: Inc and LLC. The election process is the same for both.    ### 1.1) Complete IRS Form 2553 Within Two (2) Months and Fifteen (15) Days The business must complete [IRS Form 2553](https://www.irs.gov/forms-pubs/about-form-2553) (Election by a Small Business Corporation) within a certain timeframe. - For current businesses: no more than two months and 15 days after the beginning of the tax year when the election goes into effect. - For new LLCs and C Corporations: two months and 15 days from the date of formation to choose the S Corporation election status. ### 1.2) What Happens If You Miss the Deadline for the S Corp Election If you miss the deadline, you will follow these tax guidelines for the current tax year: - Corporations are taxed as C Corporations. - Single-member LLCs are taxed as sole proprietorships. - Multi-member LLCs are taxed as partnerships. ### 1.3) Requesting a Late Election from the IRS If you are unable to file Form 2553 within the timeframe listed above, you can always request a late election from the IRS.   ![Operations Management on the Mechanism of Metal Gears.](https://media.insognacpa.com/hs-fs/hubfs/Operations%20Management%20on%20the%20Mechanism%20of%20Metal%20Gears..jpeg?width=500&height=300&name=Operations%20Management%20on%20the%20Mechanism%20of%20Metal%20Gears..jpeg) ## 2) S Corporation Business Operations S Corporations operate a little differently from other business entities. Here are the key differences to consider. ### 2.1) How to Pay Yourself as an S Corp Owner Because one of the benefits of an S Corporation is the lack of double taxation, it’s important that owners pay themselves correctly. Otherwise, you may trigger a red flag with the IRS and face an audit. Any S Corporation owner who is active must pay a reasonable salary to themselves. All employee-owners must take a reasonable salary via W-2. The S Corporation’s remaining profits are then taxed on your 1040. So the delta of tax savings is the payroll tax not paid on the owner-draw portion not being paid as a reasonable W2 salary to the owners.    ### 2.2) Ongoing Compliance Requirements for S Corporations Both LLCs and C Corporations may elect S Corporation status if they meet IRS requirements. However, the process can be complicated.  The ongoing compliance requirements vary from state to state, but here are the basics: #### LLC Requirements - **Initial Filing:** File articles of organization to form an LLC. Pay filing fees. - **Initial Report: **Some states require a statement of information with the initial filing. - **Publication Fees:** Some states charge a publication fee. - **Annual Report:** Most states require an annual report to maintain LLC status. - **Maintaining a Registered Agent:** An LLC is required to record a Registered Agent with each state in which they do business. This person (or entity) is notified in the event of a lawsuit. #### C Corporation Requirements - **Initial Filing:** File articles of organization to form a C Corporation. Pay filing fees. - **Initial Report:** Some states require an initial report. - **Publication Fees:** Some states charge a publication fee. - **Annual Report:** Most states require an annual report. - **Annual Meetings:** C Corporations are required to hold annual meetings. - **Meeting Minutes:** A written record of meetings is required. - **Maintaining a Registered Agent: **A C Corporation is required to record a Registered Agent with each state in which they do business.   ![Group of business people assembling jigsaw puzzle and represent team support and help concept](https://media.insognacpa.com/hs-fs/hubfs/Group%20of%20business%20people%20assembling%20jigsaw%20puzzle%20and%20represent%20team%20support%20and%20help%20concept.jpeg?width=449&height=300&name=Group%20of%20business%20people%20assembling%20jigsaw%20puzzle%20and%20represent%20team%20support%20and%20help%20concept.jpeg) ## Get Help Filing Taxes and Ongoing Operations for your S Corporation [Insogna CPA](https://insognacpa.com/) can answer questions and offer guidance on operating and filing as an S Corporation, helping determine a reasonable W2 salary, and making sure you avoid over-paying unnecessary payroll taxes. [Contact us ](https://insognacpa.com/contact-us/)for assistance with tax strategy—we want to help you save as much as legally possible.   ## Recommended For You [![Electing S Corp Status](https://media.insognacpa.com/hubfs/small%20business%20entity.png)](https://media.insognacpa.com/blog/electing-s-corp-status) [Tax](https://media.insognacpa.com/blog/tag/tax) [S Corp](https://media.insognacpa.com/blog/tag/s-corp) 4 Min Read ### [Why Small Businesses Should Consider S Corp to Reduce  Taxes](https://media.insognacpa.com/blog/electing-s-corp-status) [![Picture of Chase Insogna, CPA](https://media.insognacpa.com/hubfs/Chase-Insogna-1024x1024.png) Chase Insogna, CPA Oct 11, 2022 4:01:57 PM](https://media.insognacpa.com/blog/author/chase-insogna-cpa) [![S Corp reasonable compensation](https://media.insognacpa.com/hubfs/S%20Corp%20Reasonable%20Compensation.png)](https://media.insognacpa.com/blog/s-corp-reasonable-compensation) [S Corp](https://media.insognacpa.com/blog/tag/s-corp) 3 Min Read ### [Reasonable Compensation and S Corporations](https://media.insognacpa.com/blog/s-corp-reasonable-compensation) [![Picture of Chase Insogna, CPA](https://media.insognacpa.com/hubfs/Chase-Insogna-1024x1024.png) Chase Insogna, CPA Oct 12, 2022 10:46:09 AM](https://media.insognacpa.com/blog/author/chase-insogna-cpa) [![](https://media.insognacpa.com/hubfs/licensed-cpa-need-1.png)](https://media.insognacpa.com/blog/do-i-need-a-licensed-cpa-on-my-business-team) [S Corp](https://media.insognacpa.com/blog/tag/s-corp) [Business Tax](https://media.insognacpa.com/blog/tag/business-tax) 1 Min Read ### [Do I need a licensed CPA on my business team?](https://media.insognacpa.com/blog/do-i-need-a-licensed-cpa-on-my-business-team) [![Picture of Chase Insogna, CPA](https://media.insognacpa.com/hubfs/Chase-Insogna-1024x1024.png) Chase Insogna, CPA Mar 16, 2023 7:17:28 AM](https://media.insognacpa.com/blog/author/chase-insogna-cpa) Insogna CPA 3355 Bee Cave Road, Suite 503 Austin TX 78746 (512) 891-8200 - [Contact Us](https://insognacpa.com/contact-us/) - [Customer Reviews](https://insognacpa.com/testimonials-and-reviews/) - [Careers at Insogna CPA](https://insognacpa.com/careers/) - [Privacy Policy](https://insognacpa.com/privacy-policy/) - [Texas Board of Accountancy License](https://www.tsbpa.texas.gov/php/fpl/frmlookup.php?x=T71ujVIEr%2Fg%3D) [Follow us on Facebook](https://www.facebook.com/InsognaCPAs) [Follow us on LinkedIn](https://www.linkedin.com/company/insognacpa-com/) [Follow us on Twitter](https://twitter.com/InsognaCPA) [Follow us on Instagram](https://www.instagram.com/insognacpa/) ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Chase Insogna, CPA", "url" : "https://media.insognacpa.com/blog/author/chase-insogna-cpa" }, "dateModified" : "2022-11-10T18:16:45.954Z", "datePublished" : "2022-10-11T20:35:43.000Z", "headline" : "Operations and Filing Taxes as an S Corporation", "image" : [ "https://media.insognacpa.com/hubfs/S%20Corp%20Tax%20Filing.png" ], "mainEntityOfPage" : { "@id" : "https://media.insognacpa.com/blog/operating-and-filing-as-an-s-corporation", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://media.insognacpa.com/hubfs/InsognaLogoSite2020.png" }, "name" : "Insogna CPA" } } ```