How does my business become an S Corporation assuming that it otherwise satisfies the S corporation requirements?

To become an S Corporation, assuming your business satisfies the S corporation requirements, you must follow these steps:

1. Eligibility Check: Ensure your business meets the following criteria:
   • It is a domestic corporation or a domestic entity eligible to elect to be treated as a corporation.
   • It has no more than 100 shareholders, where certain family members can be treated as one shareholder.
   • Its shareholders are only individuals, estates, exempt organizations described in section 401(a) or 501(c)(3), or certain trusts described in section 1361(c)(2)(A).
   • It has no nonresident alien shareholders (except as potential current beneficiaries of an Electing Small Business Trust (ESBT)).
   • It has only one class of stock, disregarding differences in voting rights.
2. Form 2553 Filing: File Form 2553, "Election by a Small Business Corporation," with the IRS. This form must be completed and signed by a person authorized to sign the corporation's tax return. The form must include:
   • The name, address, and taxpayer identification number of the corporation.
   • The election statement identifying the election being made.
   • Consents from all shareholders at the time of the election, which must include their names, addresses, taxpayer identification numbers, the number of shares owned, the dates the shares were acquired, and the end date of their taxable year.
3. Timing of the Election: The election must be made:
   • At any time during the preceding taxable year, or
   • At any time during the taxable year and on or before the 15th day of the third month of the taxable year for which the election is to be effective.
   • If the election is made after the 15th day of the third month of the taxable year but on or before the 15th day of the third month of the following taxable year, it will be treated as made for the following taxable year.
4. Submission: Submit the original Form 2553 to the IRS service center designated in the form's instructions. If filing by fax, keep the original form with the corporation's permanent records.
5. Notification: The IRS will notify the corporation if the election is accepted and when it will take effect. If the election is not accepted, the corporation will also be notified.
6. Late Election Relief: If the election is not filed timely, you may request relief for a late S corporation election under section 1362(b)(5) by demonstrating reasonable cause for the failure to timely file and showing diligent actions to correct the mistake upon discovery. This can be done by providing the necessary information on line I of Form 2553 or an attached statement.

By following these steps and ensuring all requirements are met, your business can successfully elect to be treated as an S Corporation.

Sources:
§ 1.1362-6. Elections and consents.
Reflections on the 10th Anniversary of Rev. Proc. 2013-30
Instructions for Form 2553 (12/2020)
Rev. Proc. 2022-19
Rev. Proc. 2013-30