A limited liability company (LLC) is eligible to make an election to be treated as an S corporation for tax purposes. S corporation elections are made with the Internal Revenue Service. the New Jersey Division of Revenue requires that you make an election with the state after you make the IRS election. Your New Jersey LLC entity conversion is a two-part process.
Federal S corporation Election
Apply for an IRS Employer Identification Number (EIN), if you do not already have one. EIN’s are free and available through instant electronic delivery from the IRS website (see Resources). If your New Jersey LLC already has a federal EIN number, you do not need a new one.
Download and complete Page 1 of IRS Form 2553, Election by a Small Business Corporation (see Resources). Include the full business name and address in the top section. Write your federal EIN on Line A, the date you formed your business on Line B and “New Jersey” on Line C.
Write the date you want the S corporation election to be effective. Newly formed LLCs must make the election within 75 days of forming the business. Existing LLCs may only make the election within the first 75 days of a new tax year. If possible within these time frames, make your election date the first of the tax year. This is best for accounting and bookkeeping purposes.
Select your accounting year. Most S corporations use the calendar year method. Under this method, your accounting period runs from Jan. 1 through Dec. 31. Sign the bottom of Page 1, and include your S corporation title. A president, vice president, secretary or treasurer of the corporation may sign. Only one officer’s signature is required on Page 1.
Complete Page 2, Form 2553. Each S corporation shareholder must provide his name, Social Security number, address and percentage of business owned on Page 2. Each shareholder must sign the sheet. If you elect a fiscal year accounting period, complete Page 3. Otherwise, stop after completing Page 2.
Mail Form 2553 to: Department of the Treasury, Internal Revenue Service Center, Cincinnati, OH, 45999; or fax it to 859-669-5748.
New Jersey S Corporation Election
Download and complete Page 1, New Jersey form CBT-2553 (see Resources). This is your state S corporation election form. Provide your basic business information in the top section of the form.
Provide your federal election information. Your federal election date is the same effective date you request on federal Form 2553.
Provide your New Jersey accounting year. If you select a calendar year accounting period with the IRS, your New Jersey accounting year is from Jan. 1 through Dec. 31.
Complete the Shareholder Consent Statement section. Similar to the federal election, each shareholder must provide his basic personal information, percentage owned and signature in this section. One corporate officer must sign and date the bottom of Page 1.
Mail the form to: New Jersey Division of Revenue, P.O. Box 252, Trenton, NJ, 08646-0252. Send the form by registered or certified mail.