Single-owner business generating profits above $80k? You may be unnecessarily subjecting you and your business to extra self-employment taxes by making more in profits than what is considered reasonable compensation for your industry. Continue reading for the 5 qualifications to be a California S-Corp and remember to consult your tax advisor to reap all the benefits of a S-Corp.
California S-Corp Requirements
To qualify for S-Corp status, the corporation must meet the following requirements
Steps Before You File Form 2553
File Form 2553
In order to become an S-Corp, the corporation must submit Form 2553 (Election by a Small Business Corporation) signed by all the shareholders.
You will need to file IRS Form 2553 by
Address to File Form 2553
California Corporations submit your Form 2553 to the Ogden, UT address. Entities incorporated in other states must find their state in the left column for corresponding address on the right.
Note: send your signed election USPS certified mail for proof of submission in case it is requested by the IRS.
IRS Acceptance Notice
The service center will notify you if your application is accepted or not within 60 days of filing (sometimes up to 90 days). At that time, it will remain active until it is revoked or terminated.
As always, before filing your S-Corp election, be sure to discuss your individual situation with Hoppe Tax to find out if it is right for you and your business and discover how to fully benefit from the advantages of a S-Corp.
CPA + Partner at Why Blu