S corp election deadline: is my CPA right about the March 2026 filing date?

I'm planning to elect S corp status for my business for the 2025 tax year, but I'm a bit confused about the timeline my CPA gave me. He told me that we don't need to file for S corp election until the March 2026 deadline, which seems really late to me and doesn't make sense. If I wait until March 2026 to file the election, how am I supposed to set up my reasonable salary and distributions during 2025? Don't I need to have the S corp status actually in place before I start operating as one and taking distributions? This is my first time dealing with this process, and I want to make sure I'm doing everything correctly and not missing any important deadlines. Has anyone else been through this S corp election process recently? Should I trust what my CPA is telling me about this timeline or get a second opinion? Really appreciate any insights!

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30 comments

AstroAdventurer

•8M

Your CPA is technically correct but cutting it really close! For an S corp election to be effective for the entire 2025 tax year, you need to file Form 2553 within the first 2 months and 15 days of that tax year (so by March 15, 2025) OR within 2 months and 15 days of starting business operations if your business is new. The March 2026 deadline your CPA mentioned is likely referring to the tax filing deadline for 2025 S corps, not the election deadline. If you wait until 2026 to file the election, it would only be effective for 2026, not 2025. As for setting up your salary, you can't formally take S corp distributions until the election is approved. You'd need the election in place first, then establish reasonable compensation, and properly document distributions.

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AstroAdventurer

•8M

You can start operating as an S corp once you've submitted the Form 2553, but keep in mind the IRS will send you a confirmation letter that could take weeks or months to arrive. Most business owners proceed as if the election will be approved after filing the form. For your salary, you should establish it at the beginning of operating as an S corp. Document your salary decision based on industry standards, your role, hours worked, etc. The key is having documentation showing how you determined it was "reasonable" - this is what the IRS looks for. Keep good records of all salary payments versus distributions from day one.

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Mei Liu

•8M

I went through some serious headaches with my S corp election last year because of confusing advice like what you're getting. What helped me immensely was using taxr.ai (https://taxr.ai) to analyze my business docs and get clarity. Their system reviewed my operating agreement, financial projections, and previous tax returns, then gave me a clear roadmap for my S corp election including all the right deadlines. The tool flagged that I needed to file Form 2553 within the first 2 months and 15 days of the tax year, not when I filed my taxes the following year. This saved me from a huge mistake my previous accountant was about to make! They also helped me understand the salary vs. distribution requirements for S corps.

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Mei Liu

•8M

It actually reviews your specific documents - that's what impressed me. You upload your operating agreement, financial records, etc. and it analyzes those specific documents rather than just giving generic advice. The analysis pointed out specific clauses in my operating agreement that needed modification for S corp status. Regarding state requirements, it does cover state-specific issues. For California specifically, it flagged that I needed to file Form 100S with the Franchise Tax Board and warned me about the $800 minimum franchise tax that applies to S corps in California. It also explained the differences between federal and California S corp rules that I needed to be aware of.

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Amara Chukwu

•8M

I was really skeptical about using an AI tool for something as important as my business taxes, but after my CPA gave me some confusing advice about S corp election deadlines (similar to what you're experiencing), I decided to try taxr.ai after seeing it mentioned here. I'm genuinely impressed - it caught that my CPA had confused the 2 month + 15 day election deadline with the tax filing deadline. It analyzed my specific situation and showed me exactly what I needed to do for my election to be valid for the current tax year. The document review feature was super helpful for checking if my operating agreement was compatible with S corp status. Most importantly, it saved me from missing my election deadline, which would have pushed everything back a full year and cost me thousands in additional taxes. Definitely worth checking out if you're unsure about what your CPA is telling you.

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Giovanni Conti

•8M

If you've tried reaching out to the IRS directly for clarification on S corp election deadlines, you probably know it's practically impossible to get through to a human. After wasting hours on hold, I found Claimyr (https://claimyr.com) - they got me connected to an actual IRS agent who confirmed my specific S corp election deadline questions in less than an hour. You can see how it works here: https://youtu.be/_kiP6q8DX5c I had almost exactly your situation - confusion about when to file Form 2553 and how to handle salary vs. distributions. The IRS agent confirmed I needed to file within the first 2 months and 15 days of the tax year to have S corp status for that entire year. They also explained that waiting until the tax filing deadline would only make the election effective for the following year.

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Giovanni Conti

•8M

The way it works is they use a combination of technology and timing to navigate the IRS phone system more efficiently. They call at optimal times and use specialized methods to get through the queue faster, then connect you once they have an agent on the line. It's not about "skipping" the queue - it's about having someone else handle the frustrating waiting part. I was skeptical too at first. I had already spent over 4 hours across multiple days trying to get through to the IRS myself with no success. The frustration of being on hold for hours only to get disconnected was driving me crazy. With Claimyr, I got connected to an actual IRS agent in about 45 minutes while I just went about my day until they called me. For me, the time saved was absolutely worth it - especially when I needed urgent clarification on my S corp election deadline.

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NeonNova

•8M

Ok I need to apologize to Profile 9 above - I was totally wrong about Claimyr being a waste of money. After dismissing it as a scam, I was desperate when I couldn't get through to the IRS about my late S corp election relief options and decided to try it as a last resort. I'm honestly shocked at how well it worked. After spending literally 6+ hours over 3 days trying to reach someone at the IRS myself with no luck, Claimyr got me connected to an IRS agent in under an hour. The agent walked me through Form 2553 filing requirements and confirmed I could request relief for a late election under Rev. Proc. 2013-30. This saved me from potentially losing S corp status for the entire year, which would have cost me thousands in extra taxes. If you're stuck with S corp election questions like the original poster, this is definitely worth considering.

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Dylan Campbell

•8M

Hey, hope I'm not too late to the conversation. I actually work as a bookkeeper for several S corps, and there's something important nobody has mentioned yet. While the March 15, 2025 deadline is correct for filing Form 2553 to have S corp status for the entire 2025 year, you need to consider how you're going to handle payroll setup and state registrations BEFORE you file the election. You'll need to register for state payroll accounts, get workers' comp insurance, and set up a payroll system that properly categorizes owner payments between W-2 wages and distributions. This takes time! I'd recommend getting these logistical details sorted out in late 2024/early 2025, file the S corp election by March 15, 2025, and then you'll be all set to operate properly for the full 2025 tax year.

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Dylan Campbell

•8M

Gusto is my go-to recommendation for small S corps with just an owner-employee. It's user-friendly and specifically designed to handle the salary vs. distribution split that S corps need to track. QuickBooks Payroll is another good option if you're already using QuickBooks for your accounting. The most important thing is choosing a system that clearly distinguishes between your salary (which will show up on your W-2 and is subject to payroll taxes) and your distributions (which aren't subject to payroll taxes). This distinction is critical for S corps and is often what triggers IRS scrutiny if not done correctly. Start setting this up 1-2 months before your S corp election takes effect so you're ready to go from day one.

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AstroAdventurer

•8M

When you elect S corp status for an existing LLC, you keep the same EIN and bank accounts - nothing changes there. It's just a tax election, not a new legal entity. Your LLC legally remains the same entity, but it's just taxed differently. This is actually one of the benefits of the LLC with S corp election route versus forming an actual S corporation - you don't have to change your bank accounts, contracts, etc. You'll just start running payroll for yourself and separating distributions from salary once the election is effective.

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LordCommander

•5M

I'm dealing with a very similar situation right now! My CPA told me the same thing about waiting until March 2026, but after reading all these responses, I'm pretty sure there's been a miscommunication. It sounds like your CPA might be confusing the S corp tax filing deadline (March 15, 2026 for 2025 taxes) with the actual election deadline (March 15, 2025 for 2025 tax year). I'd definitely recommend getting clarification on this ASAP. The difference between filing the election in March 2025 vs March 2026 is huge - it's literally the difference between getting S corp tax treatment for 2025 or having to wait until 2026. That could mean thousands of dollars in tax savings lost if you miss the deadline. Also, from what I understand, you absolutely need the S corp election in place before you start taking distributions. Operating as an S corp without having filed the election could create some serious tax complications down the road.

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Keisha Williams

•5M

Exactly! This is such a common source of confusion. I think a lot of CPAs accidentally mix up the election deadline with the tax filing deadline because they're both around the same time of year (March 15th). What really helped me when I was going through this was actually writing down both dates clearly: March 15, 2025 = S corp ELECTION deadline for 2025 tax year, and March 15, 2026 = S corp TAX FILING deadline for 2025 tax year. Having it written out like that made the difference crystal clear. You're absolutely right about not taking distributions before the election is in place. I've seen people get into trouble with the IRS because they started operating like an S corp before actually filing Form 2553. The tax treatment just doesn't apply until that election is officially filed and processed.

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Ethan Wilson

•5M

This is a really important distinction that trips up a lot of business owners! Your CPA is definitely mixing up two different March deadlines. The March 15, 2025 deadline is for filing Form 2553 to elect S corp status for the entire 2025 tax year. The March 2026 deadline your CPA mentioned is when you'd actually FILE your 2025 S corp tax return (Form 1120S). If you wait until March 2026 to make the S corp election, it would only be effective starting in 2026, meaning you'd lose an entire year of potential tax savings. For a business with significant income, this could easily cost you thousands of dollars. I'd strongly recommend having a direct conversation with your CPA about this timeline confusion. Bring a printed copy of the Form 2553 instructions that clearly state the "2 months and 15 days" rule. Sometimes CPAs handle so many different tax situations that they accidentally cross wires on deadlines. Also, you're absolutely right to be concerned about setting up salary and distributions. You need the S corp election filed and acknowledged before you can properly operate under S corp tax rules. Starting distributions without the election in place could create compliance issues later.

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Nathan Dell

•3M

This timeline confusion is actually more common than you'd think! I just went through the exact same situation last month. My CPA initially told me I had until the following March to file my S corp election, and I almost missed the real deadline because of it. What really helped me was pulling up Publication 541 directly from the IRS website and showing my CPA the specific section about election deadlines. It states very clearly that the election must be made "no later than the 15th day of the 3rd month of the tax year the election is to take effect." For calendar year businesses, that's March 15th of the CURRENT year, not when you file taxes the following year. I'd also suggest asking your CPA to walk through the specific steps and timeline for your situation. Sometimes having them explain their reasoning helps identify where the confusion is coming from. In my case, my CPA was thinking about the tax filing deadline and accidentally applied that timeframe to the election itself. The good news is you caught this early enough to get it sorted out! Just make sure to file Form 2553 well before March 15, 2025 to give yourself some buffer time in case there are any issues with the filing.

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Ruby Blake

•3M

I've been helping small business owners navigate S corp elections for years, and this timeline confusion is unfortunately very common. Your instincts are absolutely correct - waiting until March 2026 would be a costly mistake! Here's what you need to know: For S corp status to be effective for the entire 2025 tax year, Form 2553 must be filed by March 15, 2025 (within 2 months and 15 days of the beginning of the tax year). The March 2026 date your CPA mentioned is likely the tax filing deadline for your 2025 S corp return (Form 1120S), not the election deadline. Regarding your salary and distribution concerns - you're spot on. You cannot legitimately take S corp distributions until the election is filed and the IRS processes it. Here's the proper sequence: 1) File Form 2553 by March 15, 2025, 2) Set up payroll to pay yourself a reasonable salary, 3) Only then can you take distributions beyond your salary. I'd recommend having a clarifying conversation with your CPA immediately. Bring the Form 2553 instructions that clearly outline the "2 months and 15 days" rule. This is a critical deadline that could save you thousands in taxes - missing it means waiting until 2026 for S corp benefits to begin. Trust your gut on this one. The timeline you're questioning doesn't make sense because it's incorrect.

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Mia Roberts

•3M

Thank you so much for this detailed breakdown! This confirms everything I was suspecting about the timeline confusion. I'm definitely going to have that conversation with my CPA first thing Monday morning and bring the Form 2553 instructions with me like you suggested. One follow-up question - when you mention setting up payroll to pay myself a reasonable salary, do you have any guidance on what "reasonable" typically means? I know it varies by industry, but I want to make sure I'm in the right ballpark when I start planning this out. My business is in consulting and I'll probably be the only employee initially. I really appreciate everyone's help in this thread - it's saved me from what could have been a very expensive mistake!

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Ethan Clark

•3M

I completely understand your confusion about the S corp election timeline - it's one of the most misunderstood aspects of business tax planning. Your CPA is definitely mixing up two different March deadlines, and this confusion could cost you thousands in tax savings if not corrected immediately. The correct timeline is: Form 2553 (S corp election) must be filed by March 15, 2025 for the election to be effective for the entire 2025 tax year. The March 2026 date your CPA mentioned is when you'll file your actual S corp tax return (Form 1120S) for 2025 - completely different deadline! If you wait until March 2026 to file the election, it would only apply starting in 2026, meaning you'd lose an entire year of potential S corp tax benefits. For most businesses, this represents significant lost savings in self-employment tax reductions. Your concerns about salary and distributions are also valid. You absolutely need the S corp election filed before you can properly operate under S corp tax rules. The sequence should be: 1) File Form 2553 by March 15, 2025, 2) Establish reasonable salary through proper payroll, 3) Document any distributions separately from salary. I'd recommend printing out the Form 2553 instructions and having a direct conversation with your CPA about this timeline discrepancy. Show them the "2 months and 15 days" rule clearly stated in the IRS instructions. This is too important to leave to chance - trust your instincts on this one!

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Javier Torres

•2M

This is incredibly helpful - thank you for breaking down the timeline so clearly! I'm definitely going to schedule that meeting with my CPA ASAP. It's really concerning that such a basic deadline could be confused, especially when it has such significant financial implications. I'm curious though - once I file Form 2553 by March 15, 2025, how long does it typically take for the IRS to process and confirm the election? Should I wait for their confirmation before I start operating under S corp rules, or can I begin implementing the salary/distribution structure immediately after filing? Also, is there any risk if I start the transition process (like setting up payroll systems) before actually filing the election form, as long as I don't take any distributions until after filing?

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Amelia Dietrich

•22d

The IRS typically takes 60-90 days to process Form 2553 and send you a confirmation letter, but here's the key: you can start operating under S corp rules immediately after filing the election, assuming it will be approved. Most businesses don't wait for the confirmation letter because the processing time can be unpredictable. However, I'd recommend keeping detailed records from day one showing exactly when you filed the election and how you've structured your compensation. If for some reason the election gets rejected (which is rare if filed correctly), you'll need to be able to unwind any S corp tax treatment. Regarding setting up payroll systems before filing - that's actually smart planning! There's no risk in getting your infrastructure ready as long as you don't actually start taking distributions or paying yourself as an S corp owner until after you've filed Form 2553. Think of it like getting your ducks in a row so you can hit the ground running once the election is filed. Just make sure your payroll system can clearly distinguish between W-2 wages (your reasonable salary) and distributions. This distinction is crucial for S corp compliance and is often what the IRS scrutinizes during audits.

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Jungleboo Soletrain

•15d

This thread has been incredibly helpful - I'm dealing with almost the exact same situation! My CPA told me we have until March 2026 to file for S corp election, but after reading everyone's responses, I'm now convinced there's been a major miscommunication. The timeline confusion between the election deadline (March 15, 2025 for 2025 tax year) versus the tax filing deadline (March 15, 2026 for 2025 taxes) seems to be more common than I realized. I'm definitely going to bring the Form 2553 instructions to my next meeting with my CPA to clarify this. One thing I'm still trying to wrap my head around - for those who have been through this process, how far in advance did you start preparing? It sounds like there's quite a bit of setup involved with payroll systems, state registrations, and getting the operational side ready before you can actually start taking advantage of S corp status. Also, has anyone had experience with the IRS rejecting an S corp election? I want to make sure I file everything correctly the first time rather than risk having to wait until 2026 if something goes wrong.

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Everett Tutum

•8d

I started preparing about 3 months before my target election date, and I'm really glad I did! The setup process involves more moving pieces than I initially realized. Here's what I learned from my experience: First, I began by researching payroll providers and getting quotes in October for a January S corp election. Setting up the payroll system itself only took a few days, but understanding how to properly structure reasonable salary versus distributions took much longer to figure out. State registrations were another time-consuming piece - I had to register for state payroll taxes, unemployment insurance, and workers' compensation (even though I was the only employee). Each state is different, but these registrations can take 2-4 weeks to process. Regarding IRS rejection - it's actually pretty rare if you file Form 2553 correctly and on time. The most common reasons for rejection are missing signatures, incorrect entity information, or filing after the deadline. I'd recommend having your CPA review the completed form before submitting, and consider sending it certified mail so you have proof of filing date. One tip: file the election at least 30 days before March 15th to give yourself buffer time in case there are any issues. The IRS doesn't care about your reasons for being late - the deadline is firm, so don't cut it close! The peace of mind from starting early was definitely worth it. By the time January rolled around, everything was set up and I could focus on running my business instead of scrambling with paperwork.

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Charlee Coleman

•1d

Your CPA is definitely confusing two different deadlines here! This is actually a really common mix-up that I see all the time. The March 2026 date they mentioned is when you'll FILE your 2025 S corp tax return (Form 1120S), but to actually ELECT S corp status for 2025, you need to file Form 2553 by March 15, 2025. If you wait until March 2026 to make the election, it would only be effective starting in 2026 - meaning you'd completely lose out on a full year of S corp tax benefits. Depending on your income level, this could easily cost you thousands in unnecessary self-employment taxes. You're absolutely right to be concerned about the salary and distribution setup. You cannot legitimately take S corp distributions until after you've filed the election. The proper sequence is: 1) File Form 2553 by March 15, 2025, 2) Set up payroll for reasonable salary, 3) Then take distributions beyond salary. I'd strongly recommend printing out the Form 2553 instructions and having a clarifying conversation with your CPA immediately. Show them the "2 months and 15 days" rule that's clearly stated in the IRS instructions. This is way too important financially to leave any room for confusion - trust your instincts on this timeline!

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