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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]
In New Jersey, an S Corporation files Form CBT-100S, Corporation Business Tax Return for S Corporations. The S Corp pays only the tiered minimum CBT tax ($375 to $2,000 based on New Jersey gross receipts). Income flowing to shareholders is reported on their personal NJ-1040 returns. [5] [6]
New Jersey also offers an elective Business Alternative Income Tax (BAIT) on Form PTE-100. The BAIT lets the S Corp pay New Jersey income tax at the entity level at graduated rates (5.675% to 10.9%), preserving the federal SALT deduction. [7]
For business owners earning $60,000 or more in net business income, the S Corp election can provide meaningful self-employment tax savings.
| 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 CBT-100S (New Jersey) | April 15 (calendar-year filers) | 15th day of the 4th month after the close of the privilege period. [5] |
| File Form 1120-S (Federal) | March 15 (calendar-year filers) | Distribute Schedule K-1s to shareholders. [3] |
| Elect BAIT (Form PTE-100) | By March 15 of the tax year | Annual election; does not carry forward. Quarterly estimated payments are required if the liability exceeds $500. [7] |
| File PTE-200-T (BAIT extension) | On or before March 15 | Grants a 6-month extension. 80% of the liability must be paid by March 15. [7] |
| Pay quarterly estimated tax | April 15, June 15, September 15, December 15 | Required if expected CBT or BAIT liability exceeds $500. [7] |
| File Annual Report (DORES) | Last day of the anniversary month | $75 fee for corporations and LLCs. [2] |
| Set up payroll | Before paying yourself a salary | Register with the NJ Department of Labor and the Division of Revenue through the NJ-REG combined application. [11] [12] |
An S Corp is a tax classification, not a standalone entity. You must have an active New Jersey corporation or LLC on file with DORES 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. [3]
You can submit Form 2553 by mail or fax. There is no filing fee.
If your principal business office is located in New Jersey, mail Form 2553 to: Department of the Treasury, Internal Revenue Service, Kansas City, MO 64999. [8]
Fax number for New Jersey businesses: 855-887-7734. [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 P.L. 2022 c.133, signed December 22, 2022, a federal S Corporation is automatically deemed a New Jersey S Corporation for privilege periods beginning on or after that date. No separate state election form is required for new entities. [1] [14]
For S Corps authorized to conduct business in New Jersey before December 22, 2022, the historical CBT-2553 election procedure still applies. Refer to NJ Technical Bulletin TB-105 for legacy guidance.
Complete the New Jersey Business Registration Application (NJ-REG) through the Division of Revenue online portal. This single application registers your business with the Division of Revenue for taxes and with the Department of Labor for unemployment insurance and withholding. [12]
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.
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.
Every New Jersey corporation and LLC must file an annual report with DORES by the last day of the anniversary month of formation. The fee is $75 for corporations and LLCs. Filing is completed online through the DORES portal. [2]
File IRS Form 1120-S and distribute Schedule K-1s to all shareholders by March 15 (calendar-year filers). File New Jersey Form CBT-100S by April 15. If the S Corp has elected the BAIT, file Form PTE-100 by March 15. [5] [7]
Pay quarterly estimated CBT or BAIT through the NJ DORES portal if expected New Jersey liability exceeds $500. Shareholders separately pay quarterly NJ-1040-ES if their personal tax exceeds $400. [7]
Late filing of Form CBT-100S incurs a 5% per month penalty on the unpaid tax, plus interest at the prime rate plus 3%. Failure to file the annual report may lead to administrative revocation of the corporate charter. [5]
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 under the full CBT for that 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 New Jersey now follows the federal S election automatically (for entities authorized on or after December 22, 2022), no separate state late-election process is required for new businesses. [1] [14]
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. Once revoked, you generally cannot re-elect S Corp status for five years without IRS consent. [3]
Because New Jersey follows the federal classification under P.L. 2022 c.133, a federal revocation automatically terminates the New Jersey S Corp status. The entity then files as a C Corp on Form CBT-100. [1]
New Jersey S Corps pay a tiered minimum CBT at the entity level based on New Jersey gross receipts. The minimum tax is reported and paid on Form CBT-100S. [5] [6]
| New Jersey Gross Receipts | Minimum CBT |
|---|---|
| Less than $100,000 | $375 [6] |
| $100,000 to $249,999 | $562.50 |
| $250,000 to $499,999 | $750 |
| $500,000 to $999,999 | $1,125 |
| $1,000,000 or more | $2,000 |
| Affiliated group with $5 million+ NJ payroll | $2,000 flat [6] |
New Jersey allows S Corps and other pass-through entities to elect entity-level taxation on Form PTE-100. The BAIT preserves the federal SALT deduction for shareholders by paying state tax at the entity level. Rates are graduated based on the sum of each member’s share of distributive proceeds. [7]
| Distributive Proceeds | BAIT Rate |
|---|---|
| $0 to $250,000 | 5.675% [7] |
| $250,001 to $1,000,000 | 6.52% |
| Over $1,000,000 | 10.9% |
The election is annual and must be made by the original due date of the return (March 15 for calendar-year filers). The election does not carry forward to subsequent years. [7]
Shareholders pay New Jersey personal income tax on their pro rata share of S Corp pass-through items at graduated rates up to 10.75% (on income over $1 million). Nonresident shareholders pay tax only on income derived from New Jersey sources. [9]
New Jersey state sales tax is 6.625% on most tangible personal property and certain services. There is no local sales tax. Register through the NJ Division of Revenue NJ-REG application. [10]
| Item | Cost |
|---|---|
| Certificate of Incorporation (corporation) | $125 [2] |
| Certificate of Formation (LLC) | $125 [2] |
| IRS Form 2553 filing | No fee [3] |
| Federal EIN (Form SS-4) | No fee |
| Annual Report (corp or LLC) | $75 per year [2] |
| Minimum CBT (annual) | $375 to $2,000 [6] |
| Registered Agent service (typical commercial) | $100 to $300 per year |
| Feature | S Corporation | LLC |
|---|---|---|
| Formation Document | Certificate of Incorporation ($125) | Certificate of Formation ($125) |
| Federal Tax Treatment | Pass-through (Form 1120-S) | Pass-through by default (Form 1065 or Schedule C) |
| New Jersey Tax Treatment | CBT-100S; tiered minimum CBT | Partnership: NJ-1065; disregarded: none |
| Annual Report Fee | $75 | $75 |
| 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 |
| BAIT Election Available | Yes (5.675% to 10.9%) | Yes if taxed as S Corp or partnership |
| Annual Report Deadline | Last day of anniversary month | Last day of anniversary month |
| 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. |
| $40,000 to $60,000 | Borderline. Run the numbers with a CPA. |
| $60,000 to $100,000 | Usually saves $2,000 to $5,000 per year. |
| $100,000 to $200,000 | Strong candidate. Savings often $5,000 to $10,000+ per year. |
| Over $200,000 | Almost always advantageous. |
Keep in mind that New Jersey’s minimum CBT and annual report fee together add roughly $1,000 to $3,000 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. |
| Form CBT-100S (New Jersey) | Due April 15. Pays the tiered minimum CBT. [5] |
| Form PTE-100 (if BAIT elected) | Due March 15. Pass-Through Entity tax return at a graduated 5.675% to 10.9%. [7] |
| Annual Report (DORES) | Filed online by the last day of the anniversary month. $75 fee. [2] |
| Form 941 (Federal Payroll Tax) | Filed quarterly. |
| NJ-927 / WR-30 | Quarterly employer and wage reports filed with the NJ Division of Revenue and the Department of Labor. [11] |
| W-2s and 1099s | Distributed by January 31. Filed with the IRS, SSA, and the NJ Division of Taxation. |
| Estimated Tax Payments | Quarterly CBT, BAIT, or personal income tax if the expected liability exceeds the threshold. [7] |
| Registered Agent Maintenance | Keep the agent and physical New Jersey address current with DORES. |
[1] New Jersey Division of Taxation. Electing S Corporation Status. Accessed May 18, 2026.
[2] New Jersey Division of Revenue and Enterprise Services. Registry Fee Schedules. Accessed May 18, 2026.
[3] IRS. Instructions for Form 2553. Accessed May 18, 2026.
[4] New Jersey Legislature. N.J.S.A. 14A:4-1 et seq. (Registered Office and Agent). Accessed May 18, 2026.
[5] New Jersey Division of Taxation. Technical Bulletin TB-105 (CBT and GIT Guidance on S Corporations). Accessed May 18, 2026.
[6] New Jersey Division of Taxation. Rates and Accounting Periods for Corporation Business Tax. Accessed May 18, 2026.
[7] New Jersey Division of Taxation. Pass-Through Business Alternative Income Tax (BAIT). Accessed May 18, 2026.
[8] IRS. Where to File Your Taxes (for Form 2553). Accessed May 18, 2026.
[9] New Jersey Division of Taxation. Income Tax Rate Schedules. Accessed May 18, 2026.
[10] New Jersey Division of Taxation. Sales and Use Tax (6.625%). Accessed May 18, 2026.
[11] New Jersey Department of Labor and Workforce Development. Register / Update Employer Account. Accessed May 18, 2026.
[12] New Jersey Department of the Treasury, Division of Revenue and Enterprise Services. Getting Registered. Accessed May 19, 2026.
[13] IRS. S Corporations. Accessed May 18, 2026.
[14] New Jersey Division of Taxation. S Corp Procedural Changes FAQ (P.L. 2022 c.133). Accessed May 18, 2026.
