Excellent
7,486 reviews
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]
In Missouri, an S Corporation files Form MO-1120S, S Corporation Income Tax Return, on or before the 15th day of the fourth month after the close of the tax year (April 15 for calendar-year filers). Shareholders then pay Missouri personal income tax on their distributive share at the state rate, which tops out at 4.7% for 2026. [10] [9]
Alternatively, under the SALT Parity Act enacted by HB 2400 of 2022 and effective for tax years beginning on or after January 1, 2022, an S Corp may elect to pay Missouri tax at the entity level by filing Form MO-PTE. The election is made annually, the rate is equal to the top individual rate, and the election preserves the federal SALT deduction at the entity level. [7]
For business owners earning $60,000 or more in net business income, the S Corp election can provide meaningful 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 MO-1120S (Missouri) | April 15 (calendar-year filers) | 15th day of the 4th month after the close of the tax year. Used by every Missouri S Corporation regardless of PTE election. [10] |
| File Form 1120-S (Federal) | March 15 (calendar-year filers) | Distribute Schedule K-1s to shareholders. [3] |
| File Form MO-PTE (if SALT Parity elected) | April 15 (calendar-year filers) | Filed in addition to Form MO-1120S when the S Corp elects entity-level taxation under Mo. Rev. Stat. Section 143.436. [7] |
| Missouri extension (Form MO-7004) | On or before April 15 | Federal Form 7004 automatically extends Missouri filing for the same period. Payment of any balance due is still required by April 15. [10] |
| File Annual Registration Report (general business corporations) | Anniversary of formation (last day of 3rd month after registration month) | $20 online or $45 paper. Missouri LLCs do not have an annual report requirement. [2] [5] |
| Pay quarterly estimated tax | April 15, June 15, September 15, December 15 | Required if expected Missouri liability exceeds $250 for the entity-level PTE tax. [7] |
| Set up payroll | Before paying yourself a salary | Register with the Missouri Department of Labor (DOLIR) Division of Employment Security for unemployment insurance and with the Department of Revenue for withholding before issuing W-2 wages. [11] [12] |
Self-Employment Tax Savings: LLC members generally pay 15.3% self-employment tax on all net business income. S Corp shareholders pay payroll taxes only on their W-2 salaries. Distributions beyond reasonable compensation are not subject to Social Security or Medicare taxes, which can save several thousand dollars per year at higher income levels.
No LLC Annual Report: Missouri LLCs do not file an annual report, while corporations must file an Annual Registration Report each year ($20 online or $45 paper). The LLC route saves a small annual filing burden. [2] [5]
SALT Parity Election on Form MO-PTE: Both S Corps and partnership-taxed LLCs may elect entity-level taxation on Form MO-PTE, preserving the federal SALT deduction. C Corporations and single-member LLCs taxed as C Corps cannot make this election. [7]
Credibility and Structure: The corporate form with officers, directors, bylaws, and shareholder meetings can enhance credibility with lenders, vendors, and investors compared with a member-managed LLC.
Employee Benefits Deductions: S Corp shareholder-employees who own 2% or less can deduct health insurance premiums, retirement contributions, and other fringe benefits pre-tax, a treatment not generally available to LLC owners.
An S Corp is a tax classification, not a standalone entity. You must have an active Missouri 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 Missouri, mail Form 2553 to: Department of the Treasury, Internal Revenue Service, Ogden, UT 84201. [8]
Fax number for Missouri 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.
Under Mo. Rev. Stat. Section 143.471, Missouri follows the federal S Corp classification automatically. Once your federal Form 2553 is accepted, Missouri will treat your business as an S Corp for tax purposes when you file Form MO-1120S each year. There is no separate Missouri election form to submit. [1]
After your federal acceptance, attach a copy of your IRS CP261 acceptance letter to your first Form MO-1120S filing as documentation.
As an S Corp shareholder-employee, you are required to 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.
Missouri general business corporations must file an Annual Registration Report with the Secretary of State. The report is due by the last day of the third month after the month of registration each year, and the fee is $20 online or $45 by paper. Missouri LLCs are not required to file an annual report. [2] [5]
File IRS Form 1120-S and distribute Schedule K-1s to all shareholders by March 15 (calendar-year filers). File Missouri Form MO-1120S by April 15. If the S Corp has elected entity-level taxation, also file Form MO-PTE for the same tax year. [10] [7]
Missouri honors a federal Form 7004 extension. If you have an approved federal extension, the Missouri filing is automatically extended for the same period. Tax due is still payable by April 15. [10]
S Corps that elect entity-level taxation and expect to owe more than $250 of Missouri PTE tax must pay quarterly estimated tax on Form MO-1120ES. [7]
Missouri imposes a 5% per month late-filing penalty (maximum 25%), plus interest at the rate set annually by the Department of Revenue. Failure to file the Annual Registration Report with the Secretary of State may lead to administrative dissolution of the corporation. [5] [10]
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 Missouri follows the federal S election automatically under Mo. Rev. Stat. Section 143.471, there is no separate state late-election process. Once the IRS grants late election relief, Missouri will treat the entity as an S Corporation for the same tax year. [1]
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 Missouri follows the federal classification, a federal revocation automatically terminates the Missouri S Corp status. The entity then files Form MO-1120 as a C Corp for tax years beginning after the federal revocation. Once revoked, you generally cannot re-elect S Corp status for five years without IRS consent. [1]
By default, Missouri S Corps files Form MO-1120S as informational returns and pay no Missouri income tax at the entity level. Shareholders report their distributive share of income on their individual Missouri returns (Form MO-1040). Nonresident shareholders pay Missouri tax only on their share of Missouri-source income. [10] [9]
Under Mo. Rev. Stat. Section 143.436, enacted by HB 2400 of 2022 and effective for tax years beginning on or after January 1, 2022, Missouri allows S Corps and other pass-through entities to elect entity-level taxation on Form MO-PTE. The election covers all members (resident and nonresident), must be made annually, and is binding for that tax year. The tax is paid at the entity level, and members claim the SALT Parity Act credit on their individual returns using Form MO-TC with alpha code SPA. [7]
| Item | Detail |
|---|---|
| Statute | Mo. Rev. Stat. Section 143.436 |
| Tax base | Each owner's distributive share of Missouri-source income [7] |
| Rate | Equal to the top Missouri individual income tax rate (4.7% for 2026) [9] |
| Election form | Form MO-PTE, filed with the Department of Revenue [7] |
| Annual election | Must be made by the original or extended due date of the return [7] |
| Member credit | Form MO-TC, alpha code SPA (SALT Parity Act) [7] |
If the S Corp does not elect Form MO-PTE, shareholders pay Missouri personal income tax on their pro rata share of S Corp pass-through items. For 2026, Missouri uses graduated rates up to 4.70% on Missouri taxable income above $9,436. Nonresident shareholders pay only on income derived from Missouri sources. [9]
Missouri imposes a 4.225% state sales and use tax on tangible personal property and certain services. Cities, counties, and special districts may add local sales taxes on top. Register through the Department of Revenue Business Tax Registration portal. [14]
| Item | Cost |
|---|---|
| Articles of Incorporation (general business corp, base) | $58 (authorized capital of $30,000 or less; tiered above) [2] |
| Articles of Organization, LLC (online) | $50 [2] |
| Articles of Organization, LLC (paper) | $105 [2] |
| IRS Form 2553 filing | No fee [3] |
| Federal EIN (Form SS-4) | No fee |
| Annual Registration Report (general business corp) | $20 online or $45 paper per year (LLCs are not required to file) [2] [5] |
| Registered Agent service (typical commercial) | $100 to $300 per year |
| Feature | S Corporation | LLC |
|---|---|---|
| Formation Document | Articles of Incorporation ($58 base) | Articles of Organization ($50 online / $105 paper) |
| Federal Tax Treatment | Pass-through (Form 1120-S) | Pass-through by default (Form 1065 or Schedule C) |
| Missouri Tax Treatment | Form MO-1120S (and Form MO-PTE if elected) | Form MO-1065 (if partnership) or none (disregarded) |
| Annual Report Requirement | $20 online / $45 paper | No annual report required |
| 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 |
| SALT Parity Election Available | Yes (Form MO-PTE) | Yes if taxed as S Corp or partnership |
| Annual Report Deadline | Anniversary of registration | N/A |
| 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 Missouri's Annual Registration Report fee (corps only), payroll setup costs, and ongoing CPA fees together add roughly $500 to $2,500 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. |
| Form MO-1120S (Missouri) | Due April 15. S Corporation Income Tax Return. Issue Missouri K-1 (Form MO-NRS or Form MO-2NR for nonresidents). [10] |
| Form MO-PTE (if SALT Parity elected) | Due April 15. Pass-Through Entity Tax Return in addition to Form MO-1120S. [7] |
| Annual Registration Report (general business corps) | Filed with the Secretary of State. $20 online or $45 paper. LLCs exempt. [2] [5] |
| Form 941 (Federal Payroll Tax) | Filed quarterly. Reports federal income tax, Social Security, and Medicare withheld. |
| Form MO-941 (Missouri Withholding) | Missouri withholding deposits (monthly, quarterly, or annual) plus annual reconciliation on Form MO W-3. [12] |
| DOLIR Quarterly Contribution and Wage Report | Quarterly UI contribution and wage report filed with the Missouri Division of Employment Security. [11] |
| W-2s and 1099s | Distributed by January 31. Filed with IRS, Social Security Administration, and the Missouri Department of Revenue. |
| Estimated Tax Payments (Form MO-1120ES) | Quarterly estimated tax if the expected Missouri PTE liability exceeds $250. [7] |
| Registered Agent Maintenance | Keep the registered agent and registered office current with the Secretary of State under Mo. Rev. Stat. Section 351.370. [4] |
[1] Missouri Revisor of Statutes. Mo. Rev. Stat. Section 143.471 (S Corporations and Missouri Treatment of Federal Election). Accessed May 19, 2026.
[2] Missouri Secretary of State. Schedule of Fees and Charges (Corporations Division). Accessed May 19, 2026.
[3] IRS. Instructions for Form 2553. Accessed May 19, 2026.
[4] Missouri Revisor of Statutes. Mo. Rev. Stat. Section 351.370 (Registered Office and Registered Agent). Accessed May 19, 2026.
[5] Missouri Secretary of State. Other Filings Required of General Business Corporations. Accessed May 19, 2026.
[6] Missouri Revisor of Statutes. Mo. Rev. Stat. Section 143.071 (Corporate Income Tax Rate, 4.0%). Accessed May 19, 2026.
[7] Missouri Department of Revenue. SALT Parity Act (SPA) FAQs and Form MO-PTE Guidance. Accessed May 19, 2026.
[8] IRS. Where to File Your Taxes (for Form 2553). Accessed May 19, 2026.
[9] Missouri Department of Revenue. 2025 Individual Income Tax Year Changes and 2026 Brackets. Accessed May 19, 2026.
[10] Missouri Department of Revenue. MO-1120S Instructions (S Corporation Income Tax Return). Accessed May 19, 2026.
[11] Missouri Department of Labor and Industrial Relations. Division of Employment Security, Employer Information. Accessed May 19, 2026.
[12] Missouri Department of Revenue. Employer Withholding Tax. Accessed May 19, 2026.
[13] IRS. S Corporations. Accessed May 19, 2026.
[14] Missouri Department of Revenue. Sales/Use Tax (4.225% State Rate). Accessed May 19, 2026.
[15] State of Missouri. Missouri Business Portal (OpenForBiz). Accessed May 19, 2026.
