S-Corp Election in Louisiana (Form 2553) (2026)

Fact-checked by the LegalGlass editorial team against primary sources · Published Aug 6, 2026 · Last updated Aug 6, 2026

You elect S-corporation status in Louisiana by filing IRS Form 2553 no later than 2 months and 15 days (about 75 days) after the start of the tax year the election takes effect. Louisiana recognizes the federal election automatically and allows an S-corporation exclusion so income taxed to Louisiana-resident shareholders is not taxed again at the entity level.

What an S-Corp Election Is - and Is Not

An "S corporation" is not a type of business entity you form with the Louisiana Secretary of State. It is a federal tax election made with the IRS under Subchapter S of the Internal Revenue Code. You first create a legal entity - a corporation or a Louisiana LLC - and then ask the IRS to tax that entity as an S corporation by filing Form 2553. The underlying entity, its registered agent, and its articles of organization do not change; only the federal, and in turn the state, income tax treatment changes.

The appeal of the election is pass-through taxation combined with potential self-employment tax savings. Instead of the entity paying corporate income tax on all profit, income flows through to the owners' individual returns. Owner-employees pay Social Security and Medicare tax only on their salary rather than on all business profit, which is the main reason profitable single-owner businesses compare an S election with the default LLC treatment. For a plain-English comparison, see S-corp vs LLC and the national business tax overview. Louisiana's own treatment turns on the S-corporation exclusion, discussed below.

Eligibility Requirements for S-Corp Status

Not every business can elect S status. Internal Revenue Code section 1361 limits the election to entities that meet all of the following conditions on the effective date:

• It is a domestic corporation or an eligible domestic business entity such as an LLC.
• It has no more than 100 shareholders (family members can be counted as one).
• Shareholders are only eligible owners - individuals, certain estates, and certain trusts. Partnerships, corporations, and nonresident aliens cannot be shareholders, so nonresident owners often first obtain an ITIN and confirm residency before electing.
• It has one class of stock (differences in voting rights are allowed, but not differences in distribution or liquidation rights).
• It is not an ineligible corporation (such as certain financial institutions and insurance companies).

If any requirement fails, the election is invalid, so confirm ownership and capital structure before filing. Many Louisiana small businesses that begin as a single-member LLC or a DBA sole proprietorship meet these tests easily. Protect any brand names through the trademark process separately; the S election has no effect on intellectual property.

How to Elect S-Corp Status in Louisiana, Step by Step

The election is a federal filing, but you also keep your Louisiana entity in good standing. Follow these steps:

1. Confirm eligibility. Review the checklist above against your ownership and stock structure.
2. Get an EIN. Apply for a free federal Employer Identification Number from the IRS if you do not already have one; Form 2553 requires it.
3. Hold a vote and collect consents. Obtain the signed consent of every shareholder. Complete Form 2553 with the entity information, effective date, and selected tax year.
4. File on time. Submit Form 2553 to the IRS by mail or fax within 2 months and 15 days of the start of the tax year, or during the preceding year.
5. Keep Louisiana filings current. Louisiana recognizes the federal election; going forward, file the state corporation income return, maintain your registered agent and annual report, and hold any local licenses.

The IRS will send a CP261 notice confirming acceptance. Keep it with your permanent records along with the stamped copy of Form 2553 and your corporate records.

How Louisiana Treats S Corporations

Louisiana does not require a separate state-level S election. Once the IRS accepts Form 2553, Louisiana recognizes the entity as an S corporation. Louisiana imposes a corporation income tax, and historically it taxed S corporations at the entity level on income allocated to the state. However, Louisiana allows an S-corporation exclusion under La. R.S. 47:287.732: the corporation may exclude from its Louisiana taxable income the portion on which Louisiana-resident shareholders are themselves taxed, avoiding double tax on that share.

Louisiana also offers an elective pass-through entity (PTE) tax that some owners use for federal deduction planning. Because Louisiana's corporate tax rules have changed in recent legislative sessions - including changes to the corporation franchise tax - you should confirm the current rates, the exact form, and whether the franchise tax applies to your entity with the Louisiana Department of Revenue before filing. In practice, a Louisiana S corporation still files a state corporation return each year to report income, claim the exclusion, and reconcile any tax due, even when most of the income ultimately lands on the resident shareholders' individual Louisiana returns. Nonresident shareholders may face composite filing or withholding at the entity level, so an S corporation with owners outside Louisiana should map out those obligations early. Compare the default treatment in Louisiana LLC tax filing and the fees in Louisiana LLC cost. Closing the entity later follows the dissolution process.

Reasonable Salary, Payroll, and Deadlines

The central compliance rule for an S corporation is reasonable compensation. A shareholder who works in the business must be treated as an employee and paid a reasonable salary through payroll - subject to Social Security, Medicare, and income tax withholding - before taking additional profit as a distribution. Paying an unreasonably low salary to reduce payroll tax is a frequent audit trigger. There is no fixed statutory figure; "reasonable" means what a comparable business would pay for the same work, considering the owner's duties, time, and experience.

Running payroll means registering for federal employment taxes and Louisiana withholding, filing quarterly Form 941, and issuing a Form W-2. The federal S corporation return, Form 1120-S, and the Louisiana corporation return are generally due after the tax year ends - the federal return by the 15th day of the third month, March 15 for calendar-year filers - with Schedule K-1 issued to each shareholder. Missing the federal or Louisiana deadline can trigger per-shareholder penalties, so calendar these dates. If your circumstances change, you can revoke the election following the IRS procedure. Owners weighing the payroll burden often review the registered agent and recordkeeping duties in the glossary first.

Is an S-Corp Election Worth It in Louisiana?

The election is not automatically beneficial. It makes the most sense once a business earns more net profit than the owner would reasonably take as salary, because only the salary portion is subject to Social Security and Medicare tax while the remaining distribution is not. In Louisiana, the S-corporation exclusion generally prevents double taxation of income taxed to resident shareholders, so the state layer is lighter than in a state that taxes the entity outright. Below the break-even point, the added cost of running payroll, filing a separate return, and maintaining stricter records can still outweigh the payroll-tax savings.

There are also non-tax trade-offs. An S corporation must respect corporate formalities: separate payroll, reasonable compensation, and clean books that distinguish wages from distributions. Owners who mix personal and business funds, or who skip payroll, lose much of the benefit the structure provides and invite IRS scrutiny. Because Louisiana's corporate tax has been changing, and because the analysis is fact-specific, most owners model the numbers with a CPA before electing. If an election turns out to be premature, the default treatment described in Louisiana LLC tax filing remains available, and you can revoke and re-elect later, subject to the IRS five-year waiting rule after a revocation.

Keep in mind that the S election changes only income tax treatment. It does not affect your liability shield, your obligation to maintain an operating agreement, your business licenses, or your duty to keep the entity in good standing through the state registry. Owners comparing states sometimes look at Florida, California, or North Dakota, which each treat the election differently at the state level.

Frequently Asked Questions

What is the deadline to file Form 2553 in Louisiana?

File within 2 months and 15 days after the beginning of the tax year the election takes effect, or any time during the preceding tax year. Late elections may still qualify for relief under Rev. Proc. 2013-30 if you show reasonable cause.

Does Louisiana recognize a federal S-corp election?

Yes. Louisiana recognizes the federal S election automatically once the IRS accepts Form 2553. There is no separate state election, and Louisiana allows an S-corporation exclusion for income taxed to resident shareholders.

Does a Louisiana S corporation pay state income tax?

Louisiana has a corporation income tax, but an S corporation may claim the S-corporation exclusion under La. R.S. 47:287.732 for income taxed to resident shareholders. Confirm current treatment with the Department of Revenue.

Can a Louisiana LLC elect S-corp status?

Yes. An eligible Louisiana LLC can be taxed as an S corporation by filing Form 2553. The LLC keeps its legal form and registered agent; only its federal tax treatment changes.

What counts as a reasonable salary?

Reasonable compensation is what a comparable business would pay for similar services. The IRS requires shareholder-employees to take a reasonable salary through payroll before distributions; there is no single statutory number.

How do I revoke the election?

File a statement of revocation with the IRS signed by shareholders holding more than half the shares. Timing determines whether it applies to the current or the next tax year.

Related

• Business tax (cluster hub)
• S-corp vs LLC comparison
• S-corp election in Florida (sibling)
• S-corp election in North Dakota (sibling)
• How to get an EIN
• How to form an LLC in Louisiana

Sources

1. IRS - About Form 2553, Election by a Small Business Corporation.
2. IRS - Instructions for Form 2553 (eligibility and deadline).
3. IRS - S Corporations (overview and requirements).
4. IRS - S Corporation Employees, Shareholders and Corporate Officers (reasonable compensation).
5. IRS - About Form 1120-S, U.S. Income Tax Return for an S Corporation.
6. IRS - About Schedule K-1 (Form 1120-S).
7. IRS - Rev. Proc. 2013-30 (late S election relief).
8. IRS - Get an Employer Identification Number (free EIN).
9. Cornell LII - 26 U.S. Code § 1361 (S corporation defined).
10. Cornell LII - 26 U.S. Code § 1362 (election; revocation; termination).
11. Cornell LII - 26 U.S. Code § 1363 (effect of election on the corporation).
12. Cornell LII - 26 U.S. Code § 1366 (pass-through to shareholders).
13. Louisiana Department of Revenue - Corporation Income & Franchise Taxes.
14. Louisiana Department of Revenue - Individual Income Tax (resident shareholder taxation).
15. Justia - La. R.S. 47:287.732 (S corporation exclusion).
16. Justia - La. R.S. 47:287.11 (corporation income tax).

LegalGlass provides general information for educational purposes and is not a law firm or a substitute for advice from a licensed attorney or tax professional. Laws, fees, and thresholds change; verify current requirements with the IRS and the Louisiana Department of Revenue before acting.