How to use this checklist

The items above are ordered the way the work actually unfolds: decide, file federally, register with the state, stand up payroll, then maintain. Check them off as you go — progress is stored in your browser, and Reset all clears it when you start a fresh entity or a new tax year. Print the page (Cmd/Ctrl + P → Save as PDF) before you meet with your accountant so you are both looking at the same list; the printed version drops this explanation and keeps the 30 action items on clean Letter pages.

Two conventions matter. First, the federal election item is not done when you have drafted Form 2553 — it is done when the IRS has acknowledged it and the CP261 confirmation letter is filed with your entity records. Second, the salary item is deliberately recurring: a salary that stayed flat while profit doubled is exactly the pattern an examiner looks for, so the checklist asks you to re-run that number every year. The deeper reasoning behind each judgment call is on the reasonable salary guide and the Form 2553 walkthrough.

The dates that actually matter

For a calendar-year entity, five deadlines carry the whole transition:

• March 15 — the last day to file Form 2553 for an election effective in the current tax year (the 15th day of the 3rd month of your tax year). A newly formed entity has its own window: within 75 days of formation, which is why the form is often signed at closing.
• If March 15 passes — the election does not take effect for that year. It slides to the following tax year unless the IRS grants late-election relief under Rev. Proc. 2013-30, which you request by filing Form 2553 as soon as you spot the miss, with the required statement attached. The IRS grants relief when the eligibility and cause requirements are satisfied — treat it as a well-founded request, not a formality.
• January 31 — W-2s due to employees and the Social Security Administration, which in year one is both you and your payroll service reconciling the first partial stretch of wages.
• March 15 (again) — Form 1120-S due with Schedule K-1s. Same date as the Form 2553 deadline makes for a busy week; put both on the calendar the year you elect.
• Monthly or semi-weekly, quarterly, annually — payroll tax deposits on your lookback-period schedule, Form 941 each quarter, Form 940 by January 31, plus whatever withholding and unemployment returns your state requires.

The effective date is tied to your tax year rather than to a date you pick freely. An existing LLC files between January 1 and March 15 and the election applies to that entire tax year; a new entity can be effective from its date of formation. Miss the window and the election lands on the next year, which means another twelve months of Schedule C — or a late-relief request, which is cheaper than a year of lost savings but not guaranteed.

What “finished” looks like

By the time year one closes, the entity folder should hold a complete paper trail: the signed Form 2553 and CP261 confirmation, any state-level election confirmation, the payroll account numbers (federal EIN plus state withholding and unemployment registrations), the year’s Form 941s and annual Form 940, the W-2, Form 1120-S with the K-1, the annual shareholder resolution documenting salary and distributions, and bank statements showing corporate income and expenses moving only through the S-Corp’s own account. If any of those is missing in April of the following year, the transition is not done — and every one of them is a document an examiner, a lender, or a buyer will eventually ask for.

Frequently asked questions

How long does the IRS take to confirm?

The CP261 notice typically arrives several weeks to a few months after filing. The election’s effective date is the one stated on the form, but keep operating as though the confirmation is pending — do not close the loop on your to-do list until the letter is in the folder.

Do I need to file anything with my state too?

Usually yes. The federal election does not automatically make you an S-Corp for state tax purposes, and several states — California, New York, and New Jersey among them — run their own election or registration with their own form and deadline. Some states then impose a corporate-level tax on top (the California $800 minimum, New Jersey’s CBT, New York’s Article 9-A), which is why the checklist folds the state check into the savings model rather than treating it as paperwork.

Does the election ever expire?

No. It continues until it is revoked, until the corporation ceases to qualify, or until it terminates under the shareholder, gross-receipts, or passive-income rules. You re-evaluate it on the schedule the checklist recommends; the IRS does not make you re-file to keep it.

Can I go back to being a plain LLC?

Yes, by revoking the election — but it needs consent from shareholders holding more than half of the voting stock, and re-electing within the next five years generally requires IRS consent. That is the mess the checklist warns about in its opening section: choose the salary and the election deliberately, because reversing them is the expensive direction.

What if my profit drops after I elect?

Re-run the numbers before your next payroll cycle. The election is worth it when profit comfortably exceeds the salary you are required to pay yourself; when profit falls below that level, the S-Corp is paying payroll tax on money the LLC would have kept, and the third-year re-evaluation item exists for exactly that case.

Is this checklist a substitute for a professional?

No — it is a checklist, not advice. It sequences the work and flags the traps; a licensed CPA, EA, or attorney confirms that each step is correct for your entity, your state, and your year. Use the calculator to size the benefit, then have the professional validate the execution.