Tax
S-corp Election (Form 2553)
Quick definition
IRS form a corporation files to elect S-corp (pass-through) taxation — must be filed within 2.5 months of formation or start of the tax year.
Form 2553 must be signed by all shareholders and filed within 75 days of either (a) the corporation's formation or (b) the beginning of the tax year for which the election should apply. Late elections may qualify for relief under Rev. Proc. 2013-30. Only viable if you have ≤100 shareholders, all US residents/citizens, and one class of stock — incompatible with most venture financing.
Related tax terms
R&D Tax Credit
Federal credit for qualified research expenses, usable against payroll tax by startups.
Delaware Franchise Tax
Annual tax for Delaware corporations, often quoted wildly too high if calculated incorrectly.
Nexus (Sales Tax)
The connection with a state that triggers a tax-collection obligation.
QSBS (Qualified Small Business Stock)
Tax exemption for gains on qualifying startup stock held 5+ years.
Frequently asked questions
- What is S-corp Election (Form 2553)?
- Form 2553 must be signed by all shareholders and filed within 75 days of either (a) the corporation's formation or (b) the beginning of the tax year for which the election should apply. Late elections may qualify for relief under Rev. Proc. 2013-30. Only viable if you have ≤100 shareholders, all US residents/citizens, and one class of stock — incompatible with most venture financing.
- Why is S-corp Election (Form 2553) important for startups?
- S-corp Election (Form 2553) is a tax concept that matters for startup founders because it directly affects fundraising readiness, financial decision-making, or operational discipline at the stage where mistakes are expensive to undo. Founders who understand it have a meaningfully easier time in diligence, board meetings, and investor conversations.
- What category does S-corp Election (Form 2553) belong to?
- S-corp Election (Form 2553) is a Tax term in the StartupCFO finance glossary — alongside other tax concepts that founders, CFOs, and accountants use in daily startup operations and reporting.
- Where can I learn more about S-corp Election (Form 2553)?
- Beyond this definition, see the related tax terms below, or explore StartupCFO's insights and tools that put S-corp Election (Form 2553) in context. For specific situations, talk to a fractional CFO who can walk through your numbers.
Got a finance question that needs more than a definition?
Talk to a real CFO. 30 minutes, no contract, free.
