---
title: "Late S-Corp Election: What You Need to Know and How to Fix It"
description: Missed the S-Corp election deadline? Learn how to file a late S-Corp election with Form 2553, understand eligibility criteria, & avoid potential penalties.
---

[Ledger Fi | Resources for growing small businesses ](https://www.ledgerfi.co/resources)

# [Late S-Corp Election: What You Need to Know and How to Fix It](https://www.ledgerfi.co/resources/late-s-corp-election-what-you-need-to-know-and-how-to-fix-it)

 Written by [Nathan Hodgens](https://www.ledgerfi.co/resources/author/team-ledger) | Feb 27, 2025 9:13:40 PM

Electing S Corporation (S-Corp) status** **can provide significant tax benefits for small business owners, but timing is everything. If you **missed the deadline **to file your S-Corp election (Form 2553), you may still qualify for a **Late S-Corp Election **under IRS guidelines. However, failing to make the election properly can lead to higher tax liabilities, penalties, and administrative headaches. 

In this guide, we’ll explain what an S-Corp election is, who qualifies for late election relief, the filing process, and why consulting a tax professional** **is crucial to avoid IRS issues. 

## **What Is an S-Corp Election? **

An **S-Corp election **is a tax designation that allows a business to be taxed as a **pass-through entity**, meaning profits and losses flow through to the owners’ personal tax returns** **instead of being taxed at the corporate level. 

### **Key Benefits of S-Corp Status: **

✅ **Avoids double taxation **(corporate + personal tax). 

✅ **Reduces self-employment taxes **by splitting income between salary and distributions.

✅ **Enhances business credibility **with lenders and investors. 

To elect S-Corp status, a business must file IRS Form 2553** **within 75 days of the start of the tax year you intended to make the election for (typically by **March 15 **for calendar-year businesses). If this deadline is missed, businesses may need to file a Late S-Corp Election. 

### **Who Qualifies to File a Late S-Corp Election?**

The IRS provides relief for late elections** **under **Revenue Procedure 2013-30**, allowing businesses to file an S-Corp election retroactively** **if they meet the following criteria: 

✅ The entity was eligible** **to elect S-Corp status on the effective date. 

✅ The entity intended** **to be an S-Corp (e.g., operated as one, paid owners via payroll).

✅ The entity filed a tax return consistent with S-Corp treatment** **(e.g., reported pass-through income). 

✅ The failure to file Form 2553 on time was due to reasonable cause. 

### **Example of a Qualifying Late Election: **

A business was formed as an Schedule-C and began operating in January 2024 with the intention of being taxed as an S-Corp. However, the owner missed the March 15 deadline** **but has been **operating the business taxes as if it were an S-Corp**. The IRS may allow a retroactive election if the business can prove its **intention to elect S-Corp status**. 

## **S-Corp Election Requirements: Extra Work Involved **

Electing S-Corp status** **comes with additional record-keeping and compliance responsibilities, including: 

### **Required S-Corp Formalities: **

- **Payroll Compliance: **Owners must be paid a reasonable salary** **before taking distributions. 
- **Corporate Meetings: **Annual board meetings and shareholder meetings** **may be required. 
- **Equity Tracking: **Distributions must be proportional to ownership percentages. 
- **Separate Business Finances: **S-Corps must maintain separate bank accounts** **and financial records. 

These additional reporting and compliance measures** **make good bookkeeping essential for S-Corp businesses.

## **When a Late S-Corp Election Is Advantageous **

A late S-Corp election** **can be highly beneficial** **for businesses that: 

✅ Have **significant net profits **and want to reduce self-employment taxes.

✅ Already **operate like an S-Corp **(paying payroll, issuing K-1s). 

✅ Want to **avoid double taxation **while maintaining corporate liability protection. 

**Related Reading: **For more details on when to become an **S-Corp**, check out our full guide on [When to Elect S-Corp Status.](https://www.ledgerfi.co/resources/form-2553-electing-s-corporation-status-for-your-business) 

## **How to File a Late S-Corp Election (Step-by-Step Guide) **

If you missed the S-Corp election deadline, follow these steps to **file a late election under Rev. Proc. 2013-30**: 

### **Step 1: Complete Form 2553 (Election by a Small Business Corporation) **

- Fill out **IRS Form 2553 **as if it were being filed **on time **(include the intended effective date).

### **Step 2: Attach a Late Election Statement **

**Important: **At the top of **Form 2553**, write:

**“FILED PURSUANT TO REV PROC 2013-30” **

****

Attach a statement explaining **why the election was filed late **and confirming: 

- The business always intended to be an S-Corp. 
- The failure to file was due to reasonable cause. 
- The business has consistently reported income as an S-Corp.

### **Step 3: Submit the Election to the IRS **

- **Fax Form 2553 **to the IRS (recommended) OR 
- **Mail Form 2553 **to the appropriate IRS address (delays possible). 
    - We don’t recommend mailing as it doesn’t offer the same proof of receipt from the IRS as faxing. 

### **Step 4: Wait for IRS Confirmation**

You will receive a letter in the mail either approving or denying your application. Be sure to keep this for your records (forever) and provide a copy to your tax preparer. 

- If approved, the S-Corp election is** retroactively effective **from the original intended date. 

For more details and the latest IRS guidelines, visit the IRS website**. **

## **Penalties & Issues from Not Filing an S-Corp Election **

Failing to properly elect **S-Corp status **can result in **significant financial consequences**:

### **Tax Consequences: **

- The business may be taxed as a C-Corp or default LLC, leading to **higher tax rates**.
- **Self-employment taxes **may apply to all business profits, increasing tax liability. 

### **IRS Penalties: **

- The IRS may **reject pass-through treatment**, forcing the business to **amend previous returns**. 
- Interest and penalties may be assessed on improperly reported income.

### **Why You Should Consult a Tax Expert Before Filing**

Filing a Late S-Corp Election** **can be complex, and mistakes can lead to IRS rejections, penalties, or tax audits. A [qualified tax professional](https://www.ledgerfi.co/resources/bookkeeping-and-tax-strategy-why-good-bookkeeping-leads-to-effective-tax-strategy-0)** **can help: 

✅ **Determine eligibility **for a late election. 

✅ **Ensure proper documentation **to avoid IRS rejection. 

✅ **Set up payroll compliance **to meet S-Corp requirements. 

At **LedgerFi**, we specialize in **S-Corp elections, late election filings, and business tax strategy**. 

Need help filing your Late S-Corp Election?** **Contact [LedgerFi today](https://meetings.hubspot.com/jeremy721/web-consultation?uuid=ca861878-cb0c-4847-bcce-aac584da8203)** **to ensure your business gets the maximum tax benefits while staying IRS-compliant. 

## **Final Thoughts: Don’t Miss Out on S-Corp Tax Savings **

If your business intended to elect S-Corp status but missed the deadline, you may still qualify for a **Late S-Corp Election under Rev. Proc. 2013-30**. Taking the right steps** **to file Form 2553 correctly can help you reduce self-employment taxes** **and ensure IRS compliance. 

### **Key Takeaways: **

✅ **Missed the deadline? **You may still qualify for **late election relief**. 

✅ **Ensure compliance **with S-Corp payroll, distributions, and tax filing rules.

✅ **File Form 2553 with a late election statement **to request retroactive approval.

✅ **Work with a tax professional **to avoid IRS issues and maximize benefits. 

Need expert guidance? Let LedgerFi help you file a Late S-Corp Election the right way! [Schedule a consultation today](https://meetings.hubspot.com/jeremy721/web-consultation?uuid=ca861878-cb0c-4847-bcce-aac584da8203).

[View full post](https://www.ledgerfi.co/resources/late-s-corp-election-what-you-need-to-know-and-how-to-fix-it)

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