S-Corp Election in New Hampshire (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 New Hampshire 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. New Hampshire does not follow federal S-corp pass-through: the entity still pays the state Business Profits Tax (7.5%) and Business Enterprise Tax (0.55%) 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 New Hampshire 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 New Hampshire 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 tax treatment does.

The federal appeal of the election is pass-through taxation combined with potential self-employment tax savings. Instead of the entity paying federal corporate income tax, profits and losses flow through to the owners' individual federal 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. New Hampshire is a special case because its business taxes ignore the federal pass-through, as explained 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 New Hampshire 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 New Hampshire, Step by Step

The election is a federal filing, but you also keep your New Hampshire 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 New Hampshire filings current. New Hampshire taxes the entity regardless of the federal election; going forward, file the Business Profits Tax and Business Enterprise Tax returns, 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 New Hampshire Treats S Corporations

New Hampshire is different from most states because it does not have a broad personal income tax and does not follow the federal S-corp pass-through for its business taxes. Instead, the state taxes business activity directly through two entity-level taxes administered by the Department of Revenue Administration. There is no separate New Hampshire S election to file, and being an S corporation federally does not exempt the entity from either tax.

The two taxes are the Business Profits Tax (BPT), imposed at 7.5% on taxable business profits, and the Business Enterprise Tax (BET), imposed at 0.55% on the enterprise value tax base of wages, interest, and dividends paid. BET paid can be credited against BPT. Small enterprises below the filing thresholds may not owe BET, so confirm the current thresholds with the Department of Revenue Administration. New Hampshire's old Interest & Dividends tax, which historically reached some distributions, has been repealed, so owners should verify the current rules. Compare the default treatment in New Hampshire LLC tax filing and the fees in registered agent guidance. Closing the entity later follows the dissolution process.

Reasonable Salary, Payroll, and Deadlines

The central federal 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. In New Hampshire, note that wages paid also enter the BET base.

Running payroll means registering for federal employment taxes, filing quarterly Form 941, and issuing a Form W-2; New Hampshire has no state wage-withholding income tax. The federal S corporation return, Form 1120-S, is generally due by the 15th day of the third month after the tax year ends - March 15 for calendar-year filers - with Schedule K-1 issued to each shareholder, while the state BPT and BET returns follow their own New Hampshire due dates. Missing the federal or state deadline can trigger 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 New Hampshire?

The election is not automatically beneficial, and New Hampshire changes the usual calculus. The federal appeal - paying Social Security and Medicare tax only on salary rather than on all profit - still applies, so a profitable owner can save on federal payroll tax. But because New Hampshire taxes the entity through the BPT and BET regardless of the federal S election, the state offers no extra pass-through savings from electing, and the entity keeps filing those returns either way. Below the federal break-even point, the cost of running payroll, filing Form 1120-S, and stricter records can outweigh the 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 New Hampshire's business taxes apply either way, most owners here weigh the election purely on the federal numbers and model them with a CPA before electing. If an election turns out to be premature, the default treatment in New Hampshire 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 federal 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, New York, or California, which treat the election differently at the state level.

Frequently Asked Questions

What is the deadline to file Form 2553 in New Hampshire?

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 New Hampshire recognize a federal S-corp election?

Not in the usual way. New Hampshire does not follow federal S-corp pass-through for its business taxes. The entity is subject to the Business Profits Tax and Business Enterprise Tax at the entity level regardless of the federal election.

What taxes does a New Hampshire S corporation pay?

Generally the Business Profits Tax at 7.5% of taxable business profits and the Business Enterprise Tax at 0.55% of the enterprise value tax base, filed with the Department of Revenue Administration. The federal S election does not remove these.

Can a New Hampshire LLC elect S-corp status?

Yes, for federal purposes. An eligible New Hampshire LLC can be taxed as an S corporation by filing Form 2553. It still owes the Business Profits Tax and Business Enterprise Tax at the entity level.

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 New York (sibling)
• S-corp election in Florida (sibling)
• How to get an EIN
• How to form an LLC in New Hampshire

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. New Hampshire RSA - Chapter 77-A, Business Profits Tax.
14. New Hampshire RSA - Chapter 77-E, Business Enterprise Tax.
15. NH Department of Revenue Administration - Business Profits Tax.
16. NH Department of Revenue Administration - Business Enterprise 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 New Hampshire Department of Revenue Administration before acting.