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Before going into the details, here is your quick checklist for starting an S Corp in West Virginia.
An S corporation is a federal tax classification under Subchapter S of the Internal Revenue Code. It is not a standalone business structure.
An eligible West Virginia LLC or C corporation files IRS Form 2553 to request S Corp status. Once approved, the business does not pay federal corporate income tax on its profits. Instead, income and losses pass through directly to shareholders' personal tax returns, where they are taxed at the individual level.
To start an S corporation in West Virginia, you first form a business entity (either an LLC or a C corporation) through the West Virginia Secretary of State. After your entity is active, you file Form 2553 with the IRS within the required deadline.
West Virginia recognizes the federal S Corp election with no separate state-level filing required. West Virginia does impose a state personal income tax on pass-through income, so S Corp shareholders in West Virginia pay state income tax on their share of profits. However, S corp status still reduces your federal self-employment tax burden, which can produce real savings for West Virginia small business owners.
Filing Form 2553 on time is one of the most important steps in the process. Miss the window and your election will not take effect until the following tax year.
| Scenario | Deadline | Effective Tax Year |
|---|---|---|
| Existing business, calendar year | March 16, 2026 | 2026 |
| New business formed January 15, 2026 | April 1, 2026 | 2026 |
| New business formed June 1, 2026 | August 15, 2026 | 2026 |
| Filed during prior year (2025) | December 31, 2025 | 2026 |
For existing calendar-year businesses, IRS rules require you to file Form 2553 by the 15th day of the third month of the tax year. In 2026, March 15 falls on a Sunday, so the deadline shifts to March 16, 2026.
New businesses have 2 months and 15 days from their formation date to file. Miss that window, and you will need to request a late election with a reasonable cause statement, or wait until the following tax year for the election to take effect.
If you wanted your S corp election to take effect at the start of 2026, you could have filed Form 2553 at any point during calendar year 2025. For all 2026 filings, use the deadlines above.
LLC members who do not elect S corp status pay self-employment tax (15.3%) on all net profits from the business. With an S corp election, you split your income between a W-2 salary and distributions. Only your salary is subject to payroll taxes. Distributions are not, which can produce meaningful savings at higher income levels.[4]
As an S Corp owner, you pay yourself a reasonable salary for the work you do in the business. Any remaining profits can then be taken as distributions. Distributions are not subject to self-employment taxes, which allows you to keep more of what your business earns while staying fully compliant with IRS requirements.
The Tax Cuts and Jobs Act allows qualifying S corp owners to deduct up to 20% of their qualified business income (QBI) from their personal tax returns under Section 199A. Distributions from an S corp may qualify for this deduction, reducing your taxable income further. W-2 salary payments do not qualify, so structuring your compensation correctly matters.[5]
West Virginia eliminated its franchise tax for all business entities effective January 1, 2015. S corporations in West Virginia do not owe a state franchise tax. Combined with the federal self-employment tax savings from S corp status, West Virginia small business owners can keep more of their profits without an added state tax layer on business assets or net worth.
Electing S corp status does not change your LLC's legal structure, operating agreement, or management setup. Your members run the business exactly as before. You keep the same liability protection and operational control. The only change is how the IRS treats your business income, not how West Virginia recognizes your legal entity.
A C corporation pays federal income tax on its profits at the corporate level. When those profits are distributed to shareholders as dividends, shareholders pay income tax a second time on their personal returns. An S corp election eliminates this second tax layer. Profits pass through directly to shareholders and are only taxed once at the individual level.
S corp shareholders can deduct business losses on their personal tax returns, up to the amount of their basis in the company. C corporation shareholders have no equivalent benefit; losses stay at the corporate level. This pass-through of losses is particularly valuable during startup years or periods of lower revenue.
C corporations that retain earnings beyond reasonable business needs may be subject to the IRS accumulated earnings tax. S corporations avoid this penalty because profits pass through to shareholders each year rather than accumulating at the entity level. This gives West Virginia S corp owners more flexibility in how they manage earnings without triggering additional federal tax exposure.
C corporations file Form 1120 and manage corporate-level taxes separately from their shareholders' personal returns. S corporations file Form 1120-S, and each shareholder receives a Schedule K-1 reporting their share of income or loss. Many business owners find the S corp pass-through structure more manageable at tax time compared to maintaining separate corporate and personal tax layers.
Selling a C corporation can trigger taxation at two levels: the corporation pays tax on the gain from an asset sale, and shareholders pay tax again on distributions. An S corp election can allow a sale to be structured to avoid this double layer of tax on the gain, potentially increasing after-tax proceeds when West Virginia business owners plan an exit or ownership transfer.
An S corp is a tax classification, not a standalone entity. You must have an active West Virginia LLC or C corporation registered with the state before you can file your IRS election. Here is how the full process works.
If you do not already have a registered West Virginia business entity, your first step is to form one. Choose the structure that fits your business goals. An LLC is simpler to maintain and works well for most small business owners. A C corporation is a better fit if you need to attract investors or issue multiple classes of stock.
Forming an LLC before your S Corp election is the most common path. West Virginia LLC filings go through the West Virginia Secretary of State. Here are the key steps:
For a full walkthrough of each step, visit our How to Start an LLC in West Virginia guide.
If you need a corporate structure before your S Corp election, here are the steps to form a C Corp in West Virginia:
Already have an active West Virginia LLC or C corporation? Skip directly to Step 2.
Once your West Virginia LLC or C corporation is active, you file IRS Form 2553, the Election by a Small Business Corporation, to officially request S corp tax treatment from the IRS. This single form changes how the federal government taxes your business income going forward. West Virginia recognizes the federal election, so no separate state filing is required with the West Virginia Secretary of State or the West Virginia State Tax Department.
Form 2553 collects the following information:
All shareholders must sign the consent portion of the form before it is submitted. An unsigned form will be rejected by the IRS.
You can submit Form 2553 by mail or fax. There is no filing fee.
Mail address for West Virginia businesses: Department of the Treasury, Internal Revenue Service, Kansas City, MO 64999
Fax number for West Virginia businesses: 855-887-7734
Faxing is typically faster than mailing. Keep your fax confirmation receipt. The IRS will send a CP261 acceptance notice to confirm your S corporation election. If your election is not accepted, you will receive a letter explaining the issue.[6]
If you file after the standard deadline, you may still be eligible for a late election under IRS Revenue Procedure 2013-30, provided you meet certain requirements. See the section below on what to do if you miss the deadline.
After your entity is formed and your S corp election is filed, you need to register your business with the West Virginia State Tax Department. West Virginia requires all businesses operating in the state to obtain a Business Registration Certificate from the West Virginia Tax Division.
You can register your West Virginia business through the West Virginia Tax Division's online portal. Once registered, the state assigns you a West Virginia tax account number used for all state tax filings going forward.
Once your S Corp election takes effect, IRS rules require you to pay yourself a W-2 salary if you work in the business. This is not optional. Owner-employees of S corporations cannot simply take all their compensation as distributions.
The IRS expects your salary to reflect what someone performing similar work, in the same industry, and in the same region would typically earn. There is no fixed formula, but the IRS flags S corps where owner salaries appear unusually low relative to distributions.
Setting your salary too low risks the IRS reclassifying distributions as wages, which would make them subject to payroll taxes. Setting it too high means you are paying more in payroll taxes than necessary.
Payroll adds ongoing administrative requirements to your business. Many West Virginia S Corp owners work with a payroll provider or accountant from day one to keep their compliance records clean and accurate.[7]
Step 5: File Form 1120-S and Your West Virginia Annual Returns
Every S corporation files its own federal tax return each year using IRS Form 1120-S. This is a separate return from your personal Form 1040, and it is due by March 16, 2026, for calendar-year S corporations. Each shareholder receives a Schedule K-1 showing their individual share of income or loss, which they use to complete their personal federal tax returns.
West Virginia pass-through entity return: West Virginia S corporations that derive income from West Virginia sources must file an annual informational return with the West Virginia Tax Division. This return reports the S Corp's income and each shareholder's proportionate share of income passed through to their personal returns.
West Virginia personal income tax: West Virginia residents who are S Corp shareholders pay state personal income tax on their share of S Corp income at graduated rates. West Virginia has been reducing its personal income tax rates in recent years.
Non-resident shareholders: If your S Corp has non-resident shareholders who earn income from West Virginia sources, the business may be required to withhold West Virginia income tax on their behalf.
Once your S corp is active, there are ongoing requirements to stay in good standing. Here is what applies specifically to West Virginia S corporations.
File Form 1120-S by March 16, 2026
S corporations file Form 1120-S with the IRS each year by March 15 for calendar-year filers (March 16 if March 15 falls on a Sunday). This return reports total income, deductions, and credits, and issues Schedule K-1 to each shareholder. A six-month extension is available by filing IRS Form 7004 by the original deadline. The extension moves the filing deadline to September 15, 2026, but does not extend your time to pay any tax owed.
File the West Virginia Annual Report by July 1
Your West Virginia S Corp must file an annual report with the West Virginia Secretary of State between January 1 and July 1 each year. Missing this deadline can result in penalties and, if left unfiled, the administrative dissolution of your entity by the Secretary of State.
File Your West Virginia Pass-Through Entity Informational Return
West Virginia S corporations that derive income from West Virginia sources must file an annual informational return with the West Virginia Tax Division. This return reports income passed through to shareholders, who then pay West Virginia personal income tax on their share.
Pay Yourself a Reasonable W-2 Salary
The IRS requires S corp owner-employees to receive a reasonable salary for work performed in the business. This salary is subject to payroll taxes. The IRS scrutinizes compensation levels in S Corp audits. Underpaying yourself to maximize distributions is one of the most common compliance issues the IRS reviews.
Run Payroll and File Employment Tax Returns
S corp owners who work in the business must be on the payroll. Federal employment taxes are deposited on a quarterly schedule using Form 941. If your West Virginia S Corp has employees, you must register with WorkForce West Virginia for unemployment compensation and remit those contributions on schedule.
Renew Business Licenses and Permits
West Virginia does not require a single general state business license, but many industries require licenses or permits through specific state agencies. Check the West Virginia Secretary of State, the West Virginia Department of Labor, and your county or city requirements to confirm what applies to your specific business.
Missing the IRS filing deadline does not automatically end your options. The IRS provides a path for late elections under Revenue Procedure 2013-30, as long as certain conditions are met.
To qualify for late election relief, your business must meet the following:
If you miss the March 16, 2026, deadline for the current tax year, your S corp election may still apply to 2026 if you file with a valid, reasonable cause explanation.
For LLCs filing a late election, you may also need to file IRS Form 8832 (Entity Classification Election) alongside Form 2553. This step is required when an LLC needs to first elect corporate tax treatment before the S corp designation can apply.
Late elections involve additional IRS review. Many business owners work with a formation service or tax professional to make sure the paperwork is complete and the reasonable cause statement is properly written before submission.
Circumstances change. There may come a point when S corp status no longer fits your business, and revoking the election is the right move.
To revoke the election, shareholders holding more than 50% of the company's stock must file a written revocation statement with the IRS service center where Form 2553 was originally submitted. There is no IRS form for this. It is a letter sent to the same Cincinnati, OH address used for Form 2553.
File the revocation on or before March 16 of the current tax year (for calendar-year businesses), and it takes effect for that year. File it after that date, and the revocation takes effect the following year.
Once an S Corp election is revoked, the entity generally cannot re-elect S Corp status for five years without IRS consent.
If any of these situations apply to your West Virginia business, it is worth reviewing your tax designation with a qualified accountant before filing a revocation.
West Virginia Secretary of State, Business Organization Search. Online portal for searching business entities and checking name availability in West Virginia
West Virginia Tax Division, Business Registration. Register for a West Virginia Business Registration Certificate and state tax accounts
West Virginia Tax Division, Pass-Through Entity. Guidance on S Corp informational return requirements and pass-through income treatment in West Virginia
WorkForce West Virginia. Register for state unemployment compensation if your S corp has employees in West Virginia
West Virginia Small Business Development Center (SBDC). Free advising, training, and resources for West Virginia small business owners
U.S. Small Business Administration, West Virginia District Office. Federal loans, grants, and business development programs for West Virginia businesses
IRS, Free EIN Application: Apply for your federal Employer Identification Number at no charge
IRS, Where to File Form 2553: Current mailing addresses and fax numbers by state
IRS, S Corporations Overview: Federal S Corp requirements, compliance, and tax treatment
