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An S Corporation is not a type of business entity. It is a federal tax classification available to qualifying corporations and LLCs that elect to have their business income pass through to shareholders for tax purposes.
The S Corp designation is governed by Subchapter S of the Internal Revenue Code. When you elect S Corp status, the business itself generally does not pay federal income tax. Instead, income, losses, deductions, and credits flow through to shareholders, who report them on their personal returns. [13]
Louisiana historically did not recognize the federal S election. Under prior law, S Corps filed Form CIFT-620 (Corporation Income and Franchise Tax Return) and excluded only the portion of net income that flowed to Louisiana-resident shareholders, with the remaining income taxed at the 5.5% corporate rate. Act 382 of 2025 (House Bill 567), signed by the governor on June 20, 2025, changes this treatment. [1] [15]
Effective for tax periods beginning on or after January 1, 2026, Louisiana automatically conforms to the federal S Corporation treatment. S Corps file an annual informational return, and both resident and nonresident shareholders report their share of income on their individual Louisiana returns at the 3% flat individual rate. This change effectively moves the applicable rate from 5.5% (corporate) to 3% (individual). [15]
For business owners earning $60,000 or more in net business income, the S Corp election can also provide meaningful federal self-employment tax savings. Only the salary you pay yourself as a W-2 employee is subject to Social Security and Medicare taxes; distributions beyond reasonable compensation are not.
| Action | Deadline | Notes |
|---|---|---|
| File IRS Form 2553 | Within 2 months and 15 days after the start of the tax year | For a January 1 tax year, the deadline is March 15. Late election relief may be available under IRS Rev. Proc. 2013-30. [3] |
| File Form 1120-S (Federal) | March 15 (calendar-year filers) | Distribute Schedule K-1s to shareholders. [3] |
| File the Louisiana S Corp informational return | May 15 (calendar-year filers, TY 2026+) | Due on or before the 15th day of the 5th month after the close of the tax year. Reports each shareholder's share of Louisiana-source income. [15] |
| File Form CIFT-620 (pre-2026 tax years) | May 15 (calendar-year filers) | Required for any S Corp tax years beginning before January 1, 2026. Calculates the 5.5% corporate income tax on income not excluded for resident shareholders. [9] |
| Louisiana composite return for nonresident shareholders | May 15 (calendar-year filers) | Beginning January 1, 2026, S Corps may file a composite return and pay tax at the 3% individual rate on behalf of nonresident shareholders. [15] |
| Pay quarterly estimated tax | April 15, June 15, September 15, January 15 | Required if expected Louisiana liability exceeds $1,000 at the entity or shareholder level. [9] |
| File Annual Report (Secretary of State) | On or before the anniversary date of incorporation | Filed online at geauxBIZ. Filing fee is $30. [5] [17] |
| Set up payroll | Before paying yourself a salary | Register with the Louisiana Workforce Commission for unemployment insurance and with the Louisiana Department of Revenue for state withholding before issuing W-2 wages. [11] [10] |
An S Corp is a tax classification, not a standalone entity. You must have an active Louisiana corporation or LLC on file with the Secretary of State before you can elect S Corp tax treatment with the IRS.
If you want to form an LLC first, check this guide.
If you want to incorporate as a C Corp first, check this guide.
Already have an existing LLC or corporation? Move to Step 1.
Form 2553, Election by a Small Business Corporation, is the IRS form that officially elects S Corp tax treatment at the federal level. It must be filed no later than 2 months and 15 days after the beginning of the tax year the election is to take effect. For a calendar-year corporation electing S Corp status for 2026, the deadline is March 15, 2026. [3]
Form 2553 collects the following information:
All shareholders must sign the consent portion of the form before submission. An unsigned form will be rejected by the IRS.
You can submit Form 2553 by mail or fax. There is no filing fee.
If your principal business office is located in Louisiana, mail Form 2553 to: Department of the Treasury, Internal Revenue Service, Ogden, UT 84201. [8]
Fax number for Louisiana businesses: 855-214-7520. [8]
Faxing is typically faster than mailing. Keep your fax confirmation receipt. The IRS will issue a CP261 acceptance notice to confirm your S Corporation election.
For tax periods beginning on or after January 1, 2026, Louisiana automatically conforms to the federal S Corp classification under Act 382 of 2025. Once your federal Form 2553 is accepted, Louisiana will treat your business as an S Corp on its Louisiana information return. No separate Louisiana election form is required for the conformity treatment. [15]
Important transition note: for any tax year beginning before January 1, 2026, Louisiana did not recognize the federal S election. Those returns were filed on Form CIFT-620 with the partial exclusion for resident shareholders under R.S. 47:287.732. [14] [1]
As an S Corp shareholder-employee, you must pay yourself a reasonable salary through W-2 payroll. The IRS scrutinizes S Corps that pay unreasonably low salaries to avoid payroll taxes.
The IRS expects your salary to reflect what someone performing similar work, in the same industry and the same region, would typically earn. There is no fixed formula, but the IRS flags S Corps where compensation is well below market and most of the owners' pay comes through distributions.
Setting your salary too low risks the IRS reclassifying distributions as wages, making them subject to payroll taxes, plus penalties and interest.
If you do not already have an EIN, apply at no charge on the IRS website (irs.gov). An EIN is a nine-digit federal ID used for tax filings, hiring employees, and opening business accounts.
Note: After obtaining your EIN, open a dedicated business bank account to keep your personal and business finances separate. This is essential to maintain your limited liability protection.
Every Louisiana corporation must file an annual report with the Secretary of State on or before its anniversary date of incorporation. The filing fee is $30 for business corporations. LLCs also file an annual report (fee $30) on their anniversary date. Filings are completed online through geauxBIZ. Failing to file for three consecutive years can result in administrative revocation. [5] [17]
Beginning with tax periods on or after January 1, 2026, Louisiana S Corps file an informational return reporting each shareholder's share of Louisiana-source income. The return is due on or before the 15th day of the 5th month after the close of the tax year (May 15 for calendar filers). For tax periods beginning before January 1, 2026, S Corps continue to file Form CIFT-620 with the partial exclusion for resident shareholders. [15] [9]
Beginning January 1, 2026, an S Corp may file a composite return and pay tax on behalf of any or all nonresident shareholders at the top individual rate (currently 3%). If the S Corp files a composite payment for a nonresident shareholder, that shareholder generally does not have to file a separate Louisiana individual return for the S Corp income. [15]
Quarterly estimated tax may be required if the expected Louisiana liability exceeds $1,000. Payments are due April 15, June 15, September 15, and January 15. Pay online through the Louisiana Taxpayer Access Point (LaTAP). [9] [10]
Louisiana imposes a delinquent-filing penalty of 5% per 30 days late (capped at 25%) plus a separate delinquent-payment penalty of 0.5% per 30 days late (capped at 25%), plus interest at the rate set annually by the Department of Revenue. [9]
If you fail to file Form 2553 with the IRS on time, your S Corp election will not take effect for the current tax year. Your business will be taxed as a C Corporation (or as a sole proprietorship/partnership if the underlying entity is an LLC) for that year, costing you the self-employment tax savings until the next tax year.
The IRS offers late election relief under Revenue Procedure 2013-30. To qualify, you must file within 3 years and 75 days of the intended effective date, demonstrate reasonable cause for the late filing, and confirm that the entity has consistently filed as if the S election were in effect. [3]
Because Louisiana follows the federal S election automatically for tax periods beginning on or after January 1, 2026, there is no separate Louisiana late-election process for those years. Once the IRS grants late election relief, Louisiana will treat the entity as an S Corporation for the same tax year. [15]
At the federal level, the S Corp election can be revoked by filing a statement of revocation with the IRS, signed by shareholders holding more than 50% of the outstanding shares. The revocation is effective the first day of the tax year if filed by the 15th day of the third month; later filings take effect the following tax year. [3]
Because Louisiana follows the federal classification from 2026 forward, a federal revocation automatically terminates Louisiana S Corp status. The entity then files Form CIFT-620 as a C Corp at the 5.5% corporate income tax rate. Once revoked, you generally cannot re-elect S Corp status for five years without IRS consent. [15] [6]
For tax periods beginning before January 1, 2026, Louisiana taxed S Corporations like C Corporations on Form CIFT-620. The S Corp could exclude the portion of net income flowing to Louisiana-resident shareholders under R.S. 47:287.732, with the remainder taxed at the 5.5% corporate rate. This treatment ends for tax years that begin on or after January 1, 2026. [14] [1] [15]
Effective for tax periods beginning on or after January 1, 2026, Louisiana automatically conforms to the federal S Corporation treatment. Both resident and nonresident shareholders report their pro rata share of income on their individual Louisiana returns at the 3% flat individual rate set by Act 11 of the 2024 Third Extraordinary Session. [15] [10]
| Entity Type | Louisiana Entity-Level Tax (TY 2026+) |
|---|---|
| S Corporation | No entity-level income tax; income passes through and is taxed at 3% on shareholders [15] |
| Partnership / LLC (partnership) | No entity-level income tax; income passes through to members at 3% [10] |
| C Corporation | 5.5% corporate income tax on net income [6] |
| Sole prop / disregarded LLC | No entity-level tax; owner pays 3% individual rate [10] |
The Louisiana corporation franchise tax was repealed for tax periods beginning on or after January 1, 2026, by Act 6 of the 2024 Third Extraordinary Session. Neither S Corps nor C Corps owes Louisiana franchise tax for tax years that begin on or after that date. Franchise tax obligations may still apply to tax periods that began earlier. [6]
Louisiana's elective entity-level pass-through tax, codified at R.S. 47:287.732.2, allows an S Corp to pay state income tax at the entity level at the top individual rate (currently 3%). Income subject to the PTE election is excluded from the shareholders' Louisiana taxable income base, which can preserve the federal SALT deduction for owners. The election is made on a tax-year basis using forms prescribed by the Louisiana Department of Revenue. [7]
Louisiana imposes a 3% flat individual income tax on shareholders' pro rata share of S Corp pass-through income (if the PTE election is not made). Nonresident shareholders pay tax only on the share derived from Louisiana sources, or the S Corp may file a composite return on their behalf. [10] [15]
Louisiana state sales tax is 5% on most retail sales for tax periods beginning January 1, 2025, through December 31, 2029 (4.45% had applied through December 31, 2024). Local jurisdictions add their own sales tax, commonly bringing combined rates to between 8% and 10%. Register through the Louisiana Department of Revenue. [12]
| Item | Cost |
|---|---|
| Articles of Incorporation (Form #399) | $75 [5] |
| Articles of Organization, LLC (Form #365) | $100 [5] |
| Name reservation (optional, 60 days) | $25 [5] |
| IRS Form 2553 filing | No fee [3] |
| Federal EIN (Form SS-4) | No fee |
| Annual Report (corporation or LLC) | $30 [5] |
| Registered Agent service (typical commercial) | $100 to $300 per year |
| Optional: credit-card convenience fee for online filings | $5 per transaction [5] |
| Feature | S Corporation | LLC |
|---|---|---|
| Formation Document | Articles of Incorporation ($75) | Articles of Organization ($100) |
| Federal Tax Treatment | Pass-through (Form 1120-S) | Pass-through by default (Form 1065 or Schedule C) |
| Louisiana Tax Treatment (TY 2026+) | Informational return; income passes through at 3% | Partnership return or disregarded; income passes through at 3% |
| Franchise Tax (TY 2026+) | None (repealed) | None (LLCs were already exempt) |
| Annual Report | $30, due on anniversary date | $30, due on anniversary date |
| Self-Employment Tax | Only on W-2 salary | 15.3% on all net earnings |
| Ownership Limits | Max 100 U.S.-person shareholders, one class of stock | Unlimited members, any type |
| Management | Directors and officers required | Flexible; member or manager managed |
| Reasonable Salary Required | Yes | No |
| PTE Election Available | Yes (R.S. 47:287.732.2) | Yes if taxed as S Corp or partnership |
| Best For | Owners earning $60K+ wanting SE-tax savings | Small businesses prioritizing simplicity |
The S Corp election makes the most financial sense when your net business income is high enough that the self-employment tax savings outweigh the cost of running payroll and the additional compliance burden. Use this guide:
| Net Business Income | Recommendation |
|---|---|
| Under $40,000 | An S Corp likely does not make sense. Payroll and compliance costs typically erase the savings. |
| $40,000 to $60,000 | Borderline. Run the numbers with a CPA. Savings may be modest after payroll-service fees. |
| $60,000 to $100,000 | S Corp election usually saves $2,000 to $5,000 per year in self-employment taxes. |
| $100,000 to $200,000 | Strong candidate. Savings often $5,000 to $10,000+ per year. |
| Over $200,000 | Almost always advantageous unless you have specific reasons (foreign investors, IPO plans) to remain a C Corp or LLC. |
Keep in mind that Louisiana's $30 annual report fee, registered agent fees, payroll setup costs, and ongoing CPA fees together add roughly $600 to $2,000 in annual costs. S Corps also have ownership restrictions that may not suit every business model.
| Requirement | Details |
|---|---|
| Form 1120-S (Federal) | Due March 15. Reports S Corp income. Distribute K-1s to shareholders. |
| Louisiana S Corp informational return (TY 2026+) | Due May 15. Reports each shareholder's share of Louisiana income. [15] |
| Annual Report (Secretary of State) | Filed online at geauxBIZ on or before the anniversary date of incorporation. $30 fee. [5] [17] |
| Form 941 (Federal Payroll Tax) | Filed quarterly. Reports federal income tax, Social Security, and Medicare withheld. |
| Form L-1 (Louisiana Withholding) | Quarterly, monthly, or semi-monthly withholding return depending on tax liability. [10] |
| Quarterly Wage and Tax Report (LWC) | Quarterly unemployment insurance wage and contribution report filed with the Louisiana Workforce Commission. [11] |
| W-2s and 1099s | Distributed by January 31. Filed with IRS, Social Security Administration, and Louisiana Department of Revenue. |
| Estimated Tax Payments | Quarterly federal and Louisiana estimated tax if expected liability exceeds $1,000. |
| PTE Election (if applicable) | Made annually on the forms prescribed by the Louisiana Department of Revenue. [7] |
| Registered Agent Maintenance | Keep agent and physical Louisiana address current with the Secretary of State. [4] |
[1] Louisiana Department of Revenue. How does Louisiana tax a corporation that is classified by the IRS as an S Corporation? (FAQ). Accessed May 19, 2026.
[2] Louisiana Secretary of State. Form #399, Articles of Incorporation (Louisiana Business). Accessed May 19, 2026.
[3] IRS. Instructions for Form 2553. Accessed May 19, 2026.
[4] Justia. Louisiana R.S. 12:1-501 (Registered Office and Registered Agent). Accessed May 19, 2026.
[5] Louisiana Secretary of State. Business Services Forms and Fee Schedule. Accessed May 19, 2026.
[6] Louisiana Department of Revenue. Corporation Income and Franchise Taxes. Accessed May 19, 2026.
[7] Justia. Louisiana R.S. 47:287.732.2 (Pass-Through Entity Tax Election). Accessed May 19, 2026.
[8] IRS. Where to File Your Taxes (for Form 2553). Accessed May 19, 2026.
[9] Louisiana Department of Revenue. Form CIFT-620 Instructions (Corporation Income and Franchise Tax Return). Accessed May 19, 2026.
[10] Louisiana Department of Revenue. Individual Income Tax. Accessed May 19, 2026.
[11] Louisiana Workforce Commission. Employer Unemployment Insurance Taxes. Accessed May 19, 2026.
[12] Louisiana Department of Revenue. Sales Tax. Accessed May 19, 2026.
[13] IRS. S Corporations. Accessed May 19, 2026.
[14] Justia. Louisiana R.S. 47:287.732 (S Corporation Exclusion). Accessed May 19, 2026.
[15] Forvis Mazars. Louisiana Makes Changes to S Corporation Taxation (Act 382 of 2025). Accessed May 19, 2026.
[16] Louisiana Secretary of State. Form #365, Articles of Organization (Louisiana Limited Liability Company). Accessed May 19, 2026.
[17] Louisiana Secretary of State. geauxBIZ Online Filing Portal. Accessed May 19, 2026.
