Are you maintaining a business that is a C organization yet you have chosen to record your charges as a S company? If this is the case then you need to inform the IRS about it ahead of time. So as to switch the status of your organization, you should round out the IRS Form 2553. Now you must be wondering what is the need of doing this. The answer to this is, it helps in reducing your yearly annual income tax liability.
IRS Form 2553 is to inform the IRS about this change from C organization to S partnership. At the time of forming the business, on the off chance that you don't explicitly pick the S partnership status, then the IRS assumes it as a C organization. You should take an extra step of changing the status.
By doing this switch, your organization will be transformed into a "go through element" for tax filing purposes. After this you will not need to pay a corporate income tax at the rate of up to 35 percent. You will only have to pay the taxes on the income at your own individual income tax rates.
You need to fill out the tax form 2553 two months and 15 days after the start of the financial year in which this switch will happen. If you missed the due date for filling out the Form 2553, then you should meet a couple of conditions so that you can file it even after the due date.
A few people choose to deal with all of these things themselves. It is very common to feel burdened at such times. Then again, individuals who are not unreasonably much acquainted with all the expense terms and codes, decide to employ a tax professional. We have a large team of dedicated tax accountants who are just a call away. You can call us on +1-844-860-1101 We are available 24x7.
