Law & Taxation mentor Barbara Weltman responds to the following question from an inc.com user: How do I change my corporate structure from a C corporation to an S corporation?
Barbara Weltman responds: To elect S corporation status, you must file IRS Form 2553, Election by a Small Business Corporation (PDF), no later than the 15th day of the third month of the corporation's tax year. (That's March 15 for corporations that use the calendar year as their tax year.) You can also file at any time for the next tax year. For example, if you use the calendar year as your tax year, you can file in July 2000 for an S corporation election that will take effect January 1, 2001. Make sure you read the instructions for Form 2553 carefully and are clear that your company is eligible for S corporation status.
In some cases, converting from a C corporation to an S corporation can create tax complications. Before you make the decision to switch, it is important that you check with a tax professional about your particular situation. Also check with your state tax department or tax professional about whether you can file for S status for state income tax purposes. You may need to file a separate election form.