How to elect S-Corp status in Texas

An S-Corporation election in Texas can save self-employed business owners thousands in self-employment tax. The federal deadline is March 15 (Form 2553). Texas state-level tax treatment is 0.375% franchise tax. We file the federal election and any required Texas forms for $0 service fee.

An S-Corp election in Texas typically makes sense when:

• Your business net profit is roughly $40,000 or more per year
• You can pay yourself a reasonable salary plus take distributions
• You are willing to run payroll (required for S-Corp owners)
• You file your S-Corp tax return by March 15 each year

The savings come from splitting your income between W-2 wages (subject to FICA) and S-Corp distributions (not subject to self-employment tax). Use our S-Corp savings calculator to see your specific number.

1. Have an eligible entity. Your Texas LLC or C-Corporation must already exist. Form an LLC or form a corporation first if needed.
2. Confirm eligibility. All shareholders must be US persons (no corporations, partnerships, or foreign nationals), and you must have 100 or fewer shareholders.
3. File IRS Form 2553. Submit within 2 months and 15 days of the tax year you want the election to take effect, or by March 15 of the current year.
4. Check Texas state requirements. Some states require a separate state-level election. Texas's tax treatment is 0.375% franchise tax.
5. Set up payroll. S-Corp owners must take a reasonable salary subject to payroll tax. Our payroll partners handle setup.
6. File annual S-Corp returns. Form 1120-S federally and Texas state returns by March 15 each year.