How to Change a C Corporation to an S Corporation

When I first incorporated my business, I organized as a C Corporation . . . but I wasn’t exactly sure what I was doing. Now, I might want to change my C Corporation to an S Corporation. Is it too late?

Don’t worry; you’re not alone. This is a more common occurrence than you might think—S Corporation status must be specifically requested (or “elected”), so if you filled out your Articles of Incorporation and sent them in without mentioning anything one way or the other, you’re probably a C Corporation.

But what if you suspect you made a mistake, and through discussion with your accountant or legal advisor you’ve decided S Corp status is better? Is it too late to do anything about it?

Form 2553: C Corporation to S Corporation Status Change

The IRS provides a form, Form 2553, that allows you to switch from a C Corporation to an S Corporation; in other words, it allows you to elect S Corp status, changing your corporate tax payment structure.

However, Form 2553 must be filed with the IRS in a timely manner: within 1 year. If it’s been more than a year, you have three options, depending on eligibility:

1. File Form 2553 with the initial version of Form 1120S (your C Corporation return) within 6 months of Form 1120S’s due date.
2. File Form 2553 with the IRS Service Center specified on the form, by mail or by fax, and write at the top the following: “Filed pursuant to Rev. Proc. 2003-43” along with an explanation of the delay. File this with your C Corporation return, Form 1120.
3. File Form 2553 with the IRS Service Center you tried to file Form 1120S with (if applicable), and file both of these forms by the C Corporation return’s due date.

Further explanation of this process can be found on the IRS’s page titled “Filing Requirements for Filing Status Change.”

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