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Texas . S-Corp Election

Elect S-Corp tax status for your Texas business.

S-Corp is a federal tax election, not a Texas entity type. Both LLCs and Corporations can elect S taxation by filing Form 2553 with the IRS. For profitable owner-operators, the savings on self-employment tax can be substantial. For founders below the breakeven, the extra compliance is not worth it.

File Form 2553 with File.Business →

When S-Corp election makes sense in Texas

  • Net profit above ~$50,000-$80,000. Below that, the salary + payroll-tax + accounting cost wipes out the savings.
  • Owner actively works in the business. Passive investors do not benefit.
  • Owner is a US citizen or resident. Foreign owners are not eligible for S-Corp election.
  • Entity has ≤100 shareholders and a single class of stock.
  • Profits exceed reasonable salary needs. Distributions in excess of salary avoid self-employment tax.

Form 2553 deadline for Texas entities

Form 2553 must be filed within 2 months and 15 days of the start of the tax year you want the election to apply. For calendar-year entities formed January 1, that means March 15.

Missed the deadline? Rev. Proc. 2013-30 allows late S-Corp elections with reasonable cause within 3 years and 75 days of the intended effective date. File.Business handles late elections.

Quick savings math

If your Texas business nets $150,000 and you pay yourself a $70,000 reasonable salary, you avoid self-employment tax (15.3%) on the remaining $80,000 distribution . saving roughly $10,000 a year after payroll-tax costs.

Numbers are illustrative. Actual savings depend on payroll-tax costs, state income tax, and reasonable-compensation requirements. Consult a CPA.

FAQ

Frequently asked questions

Should my Texas LLC elect S-Corp status?
Generally only if net profits exceed $50,000-$80,000 and you actively work in the business. Otherwise the compliance cost exceeds the savings.
When is Form 2553 due for a Texas business?
Within 2 months and 15 days of the start of the tax year. For calendar-year businesses: March 15.
Can a foreign founder elect S-Corp for their Texas LLC?
No. Only US citizens and resident aliens qualify as S-Corp shareholders. Foreign owners must use C-Corp or default LLC treatment.
Does S-Corp election change my Texas state filings?
No state-level change to your entity. {s["name"]} still treats you as an LLC or Corporation. The election is federal only.
What is "reasonable compensation" for an S-Corp owner in Texas?
IRS requires owner-operators to pay themselves a salary comparable to what someone else would earn for the same work. Underpaying triggers audit risk.
Can a single-member Texas LLC elect S-Corp?
Yes. Form 8832 first to elect Corporation treatment, then Form 2553 (or just 2553 . IRS accepts it as both elections). File.Business handles the package.
Does File.Business file Form 2553 for Texas entities?
Yes. We prep, file, and confirm IRS acceptance. Late elections too.

Ready to handle this the easy way?

Five minutes per filing. State fee passed through at cost. Audit trail and deadline tracking included.

File Form 2553 Form a Texas entity first

Disclosure. File.Business is a private business filing and compliance service. We are not a government agency and are not affiliated with the Texas Secretary of State or any Secretary of State office. You may file directly with the Texas Secretary of State. Information on this page is for general guidance only and is not legal, tax, or accounting advice. Fees and deadlines verified against the Texas Secretary of State as of June 2026 and may change. For entity-specific guidance, consult a licensed Texas attorney or CPA.

File Form 2553 . $149
File.Business is a private business filing and compliance service. We are not a government agency and are not affiliated with any Secretary of State office. You may file directly with the appropriate state agency. SOC 2 Type II audited. 220,000+ businesses formed since 2017.