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

Q: How do I elect S-corp status in Mississippi?

You file IRS Form 2553, Election by a Small Business Corporation, signed by all shareholders. Mississippi recognizes the federal S election for state income tax purposes, so a valid federal S corporation is generally treated as an S corporation for Mississippi income tax. Confirm any separate state filing with the Mississippi Department of Revenue.

Q: What is the deadline to file Form 2553?

Generally, Form 2553 is due no later than 2 months and 15 days after the beginning of the tax year the election is to take effect, or at any time during the tax year before the year it takes effect. Late elections may still qualify for relief if you meet the IRS requirements.

Q: Who is eligible to be an S corporation?

An eligible entity must be a domestic corporation or LLC with no more than 100 shareholders, only allowable shareholders (generally US individuals and certain trusts and estates, not partnerships or corporations), only one class of stock, and no ineligible entity status such as certain financial or international entities.

Q: Do S-corp owners have to take a reasonable salary?

Yes. A shareholder who works in an S corporation must be paid reasonable compensation as W-2 wages subject to payroll taxes before taking distributions. The IRS scrutinizes S corporations that pay little or no salary while taking large distributions, and can reclassify distributions as wages.

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

To elect S-corporation status, an eligible LLC or corporation files IRS Form 2553, generally no later than 2 months and 15 days after the start of the tax year the election takes effect. Mississippi recognizes the federal S election for state income tax, so a valid federal S corporation is treated as an S corporation for Mississippi income tax.

Quick Answer

Federal form: IRS Form 2553, Election by a Small Business Corporation
Deadline: 2 months and 15 days after the start of the tax year (or any time in the prior year)
Mississippi: Recognizes the federal S election for state income tax
State agency: Mississippi Department of Revenue (income and franchise tax)
Salary rule: Owner-employees must take reasonable W-2 compensation
Eligibility: ≤100 shareholders, one class of stock, allowable shareholders only

What an S-Corp Election Is

An "S corp" is not a type of entity you form at the state level - it is a federal tax election. You first create a legal entity, either a corporation or an LLC, and then you ask the IRS to tax it under Subchapter S of the Internal Revenue Code by filing Form 2553. An S corporation is a pass-through: it generally pays no federal income tax at the entity level, and profits and losses flow through to the shareholders' personal returns, avoiding the double taxation of a C corporation. The election is governed by sections 1361 and 1362 of the Internal Revenue Code. In Mississippi, the same entity you formed with the Secretary of State keeps its legal form; only its tax treatment changes. Compare the structures on S-corp vs LLC.

For a Mississippi LLC, the S election adds a layer on top of the default tax rules. By default, the IRS treats a single-member LLC as a disregarded entity and a multi-member LLC as a partnership; either can elect to be taxed as an S corporation while remaining an LLC under Mississippi law. The reason owners do this is usually self-employment tax savings, discussed below. See the business tax overview for the bigger picture and the glossary for terms.

Eligibility Requirements

Not every business can be an S corporation. To be eligible, the entity must be a domestic corporation or LLC and meet all of these tests: it has no more than 100 shareholders; all shareholders are allowable owners (generally US individuals, and certain estates and trusts - not partnerships, corporations, or nonresident aliens); it has only one class of stock; and it is not an ineligible corporation, such as certain financial institutions and insurance companies. Family members can be treated as a single shareholder for the 100-shareholder count under specific rules.

These requirements come straight from Internal Revenue Code section 1361. If your ownership structure includes another business entity as an owner, or a nonresident alien member, you will not qualify until that changes. For a Mississippi LLC electing S status, "one class of stock" translates to a single class of ownership interest with identical rights to distributions and liquidation proceeds, so unequal economic arrangements in an operating agreement can jeopardize eligibility. Review your formation documents and operating agreement before electing.

The Form 2553 Deadline

Timing is the single most common S-election mistake. The general rule: Form 2553 must be filed no later than 2 months and 15 days after the beginning of the tax year the election is to take effect, or at any time during the tax year before the year it takes effect. For a calendar-year business whose tax year begins January 1, that puts the deadline in mid-March. A newly formed entity's first tax year begins when it first has shareholders, acquires assets, or begins doing business - whichever is earliest - so new Mississippi LLCs should calendar the deadline from that date, not from the state formation date.

If you miss the window, all is not lost. The IRS provides late-election relief for entities that intended to be S corporations, had reasonable cause for the delay, and meet the requirements in the Form 2553 instructions - you can often file a late Form 2553 with a reasonable- cause statement. Every shareholder must consent to and sign the election. File after you have your federal EIN, because Form 2553 requires it.

Item	Detail
Form	IRS Form 2553, Election by a Small Business Corporation
General deadline	2 months + 15 days after the start of the tax year
Alternative	Any time in the tax year before the year it takes effect
Signatures	All shareholders must consent
Late filing	Relief available with reasonable cause (see instructions)
Annual return	Form 1120-S filed each year for the S corporation

How Mississippi Treats S Corporations

Mississippi generally recognizes the federal S election for state income tax purposes. That means a corporation or LLC treated as an S corporation federally is treated as a pass-through for Mississippi income tax, with income flowing to the owners rather than being taxed at the entity level under the corporate income tax. Mississippi S corporations file a state pass-through entity return with the Mississippi Department of Revenue, and shareholders report their share on their Mississippi individual returns. Because state forms and procedures change, confirm the current pass-through entity return and any elections on the Department of Revenue's business tax pages before filing.

Mississippi historically imposed a franchise tax on corporations measured by capital, and the state has been phasing that tax down over time. Whether and how it applies to your entity depends on your structure and the current year's rules, so verify the franchise-tax status with the Department of Revenue rather than assuming. Note that electing S status federally does not change your Mississippi entity - your LLC or corporation still exists under the Secretary of State, must keep a registered agent, and must stay in good standing. See business tax for more.

Reasonable Salary and Self-Employment Tax

The reason most owners elect S status is self-employment tax. In a default LLC, all net profit is subject to the 15.3% self-employment tax. In an S corporation, an owner who works in the business must be paid reasonable compensation as W-2 wages subject to payroll taxes, but the remaining profit taken as distributions is not subject to self-employment tax. That split is where the potential savings come from - but only on the portion above a genuinely reasonable salary.

The IRS actively scrutinizes S corporations that pay owners little or no salary while taking large distributions, and it can reclassify distributions as wages, adding back payroll tax plus penalties and interest. "Reasonable" means what you would pay someone else to do your job, considering your duties, experience, and industry. The election also brings real costs: running payroll, filing Form 1120-S, issuing a W-2 and Schedule K-1, and added bookkeeping. Because of these costs, the S election typically makes sense only once profits are high and consistent enough that the SE-tax savings clearly exceed the added administration. Run the numbers - see self-employment tax calculator and S-corp vs LLC - and consider professional advice.

Frequently Asked Questions

How do I elect S-corp status in Mississippi?

File IRS Form 2553, signed by all shareholders. Mississippi recognizes the federal S election for income tax, so a valid federal S corporation is generally treated as an S corporation for Mississippi income tax. Confirm any separate state filing with the Mississippi Department of Revenue.

What is the deadline to file Form 2553?

Generally, no later than 2 months and 15 days after the beginning of the tax year the election takes effect, or any time during the prior tax year. Late elections may still qualify for relief if you meet the IRS requirements.

Does Mississippi recognize the federal S-corp election?

Yes. Mississippi generally follows the federal S election for income tax, so an entity treated as an S corporation federally is treated the same for Mississippi income tax and files a state pass-through entity return. Verify current forms with the Department of Revenue.

Who is eligible to be an S corporation?

A domestic corporation or LLC with no more than 100 shareholders, only allowable shareholders (generally US individuals and certain trusts and estates, not partnerships or corporations), one class of stock, and no ineligible entity status.

Do S-corp owners have to take a reasonable salary?

Yes. A shareholder who works in the S corporation must be paid reasonable W-2 wages subject to payroll taxes before taking distributions. The IRS can reclassify distributions as wages when the salary is unreasonably low.

Why elect S-corp status for a Mississippi LLC?

The main reason is potential self-employment tax savings: only the reasonable salary is subject to payroll tax, while remaining distributions are not subject to self-employment tax. The trade-off is added payroll and filing cost, so it usually fits once profits are consistent.

Sources

IRS - About Form 2553, Election by a Small Business Corporation.
IRS - Instructions for Form 2553 (deadline; late-election relief).
IRS - S Corporations (overview; eligibility).
IRS - S Corporation Employees, Shareholders and Corporate Officers (reasonable compensation).
IRS - About Form 1120-S, U.S. Income Tax Return for an S Corporation.
IRS - Get an Employer Identification Number.
IRS - Limited Liability Company (LLC) (entity classification election).
Mississippi Department of Revenue - Business tax (pass-through entities; corporate and franchise tax).
Mississippi Department of Revenue - Tax forms.
Mississippi Secretary of State - Business Services (entity formation and good standing).
Legal Information Institute (Cornell) - 26 U.S.C. Section 1361, S corporation defined.
Legal Information Institute (Cornell) - 26 U.S.C. Section 1362, Election; revocation; termination.
Legal Information Institute (Cornell) - 26 CFR 1.1362-6, Elections and consents (timing).
Justia - Mississippi Code Title 27, Taxation and Finance.
Justia - Mississippi Code Title 79, Corporations, Associations, and Partnerships.

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. Tax rules, forms, and deadlines change; verify current requirements with the IRS and the Mississippi Department of Revenue before acting.