Question

A corporation wishes to make the s-corporation election effective from inception of the business. The corporation is incorporated on June 3, 2019, issues stock to its shareholders on July 20, 2019 and begins doing business on September 7, 2019. To be effective since inception, the corporation must make the s-corporation election by October 5, 2019. True/False

Answer 1

To register a business as an S corporation, Articles of Incorporation (sometimes called a Certificate of Incorporation or Certificate of Formation), must be filed with the state and the necessary filing fees paid. After incorporation, Form 2553 must be filed with the IRS in order to elect S corporation status.

Once your corporation is formed, you will need to file Form 2553 within these timeline restrictions:

• No later than two months and 15 days after the selected tax year begins.
• Any time during the tax year before the tax year that S corporation status will take effect.

If you can show a reasonable cause for failing to file on time, you can request a late election. Follow all directions on Form 2553 carefully. While forming an S corporation is a tedious exercise, failure to execute all requirements will revoke corporate personhood and liability protection, which could leave your personal assets vulnerable to seizure