Corporation or S corp? Which paper decides?

A preparer can file the return for whatever the menu already says, and that filing only counts what already happened. The open decision is whether owner pay is wages or a draw, whether an election is still inside its window, and what the federal calendar should carry. We settle the paper, then we close the months, then we read the year while it can still change. A certificate of formation from the state that created the company is one paper. The fee on that filing is whatever that state's own instructions print, and this page will not invent a number for it. The certificate names an LLC or a corporation. It does not choose how the IRS will tax the year. Owners often meet those two facts on the same afternoon and treat them as one decision. They are not. The state fee and the federal election belong to different offices and to different years of the company's life.

Whether any federal status shows up is a later question, answered only by mail. An S election is Form 2553, signed by every shareholder, inside a window of no more than 2 months and 15 days after the tax year begins, or during the prior year. We do not flatten that window into one March date for every company. A corporation with no accepted election is still taxed as a C.

Qualified shareholders, one class of stock, and the 100 shareholder cap are the plain limits on that election. Late relief is described in Revenue Procedure 2013-30. We name the procedure. We do not promise the IRS will grant it. The paper we ask to see is the acceptance, not a screenshot of a dropdown.

Once the acceptance is in the file, the books have a status to follow. Stock, wages, and distributions stop sharing one bucket. Basis matters, and we say so before anyone treats a draw as harmless. A draw taken while the status was still unknown stays a draw until wages are set up on the provider you already run.

Shareholder employees take reasonable wages before distributions. The wage has to be a real wage for the work, not a round number picked to make a draw look like pay. We do not invent a client's figure here. We set the question up so the provider you already run can calculate it.

Payday stays off these pages. The provider you already run does the wage calculation, the payroll returns, and the deposit, and our part stops at getting that provider pointed at the right status. We do not run payday. If the acceptance is missing, wage talk waits. Setting up a payroll file on a guess is how a year gets rebuilt in April.

The monthly close still has a job after the status is known. Open months get current before we build on them. A return follows the closed months, not a folder of bank downloads. Reconciliations, financial statements, and a plain report of what changed are the ordinary product.

The federal return still has a calendar after the status is known. A calendar year S company generally files Form 1120-S by the 15th day of the third month. An extension is a request for more time to file, not a pass on tax already due. Estimated payments that owners make on passthrough income commonly sit on the 15th of April, June, September, and January. We do not flatten every company onto one March proverb. A fiscal year owes a different morning, and the instructions start the clock on the day that year opens.

Those federal dates read the closed months. They do not read the software menu. A second set of books built only for a draft return is how the filing and the month drift apart. Open months get current before anyone argues about which form the year deserves. If a K-1 is expected and the acceptance is missing, the calendar does not invent the K-1. The paper does.

The titles on this practice, Tax CFO and Entrepreneur's CFO, both sit with Steven Palmieri. We keep the books, set up payroll on the provider you run, and prepare the return that matches the status the papers show. A lawyer still owns the liability question and the company agreement. The certificate dates and the owner names go to that lawyer with the file. We do not replace that lawyer.

We keep the books and prepare the return, and a signed audit, review, or compilation goes to a firm that can put a name on it. The disclosures page says that once, in the section that draws the line. These public pages are general reading. Your own certificate and your own acceptance decide the year. Nothing here is a bill, a filing, or a promise about a result.

If a K-1 is missing for a year someone describes as an S year, we treat that as a question about the status, not as a small paperwork gap. The acceptance, the wage ledger, and the equity accounts have to tell the same story before the return is prepared.

The wage limit inside the qualified business income rules can change how much of the passthrough income is favored. We talk about that limit in words, not as a year specific dollar cliff. When wages are too thin for the work, the limit is one more reason to have the wage conversation before distributions.

Equity is three different things sitting near each other. Stock is ownership. A distribution is money leaving after the wage. A wage is pay for work. Basis goes up and down with income, loss, and those movements. A public page is the wrong place for anyone's real basis schedule.

On the call, have the state certificate nearby and say whether the IRS acceptance is in the folder or still missing. Those two facts can open the call. The form below asks the same thing.

The wage account and the equity account stay apart once the acceptance is filed. A draw taken before that letter arrives is still a draw, and the books should not rename it to wages to match a dropdown.