How to Form an S Corp in Delaware: Filing, EIN, and Form 2553

Forming an S corp in Delaware takes two separate filings: you first create a corporation under Delaware law by filing a Certificate of Incorporation with the Division of Corporations, then you file IRS Form 2553 to have that corporation taxed as an S corporation. The “S corp” label is a federal tax classification under Internal Revenue Code Section 1362, not a distinct entity type. Your Delaware corporation stays the same legal structure regardless of how the IRS taxes it, but the S election lets profits and losses pass through to shareholders and can lower employment taxes.

Step 1: File the Certificate of Incorporation

The Certificate of Incorporation is the document that brings your corporation into legal existence. Delaware publishes a template on the Division of Corporations website.¹ Before you fill it out, you need to settle a few decisions.

Pick a Distinguishable Name

Your corporate name must be distinguishable from every other entity on file with the Division of Corporations, and it must include a corporate signal word such as “Association,” “Company,” “Corporation,” “Incorporated,” or an abbreviation like “Corp.” or “Inc.”² You can check availability on the Division’s website before filing. If the name you want is taken, the existing entity can give written consent, but choosing a unique name avoids delays.

Appoint a Registered Agent

Every Delaware corporation must list a registered agent with a physical street address in Delaware. The agent accepts lawsuits and official state notices for the corporation, and the agent’s name and full street address (city, county, and zip) appear in the Certificate.³ If you have no physical office in the state, a commercial registered agent service typically costs $50 to $150 per year.

Set Your Authorized Shares

The Certificate must state the total number of shares the corporation can issue and whether those shares have a par value or no par value.⁴ Many small corporations authorize 1,500 shares or fewer at a low par value such as $0.01. Keeping the authorized count at or below 5,000 holds your annual Delaware franchise tax at the $175 minimum.

Name the Incorporator

The person who signs and files the Certificate is the incorporator. The incorporator does not need to be a shareholder, director, or Delaware resident, and they have authority to run initial setup until directors are elected.⁴

Submit and Pay

You can upload the completed Certificate as a PDF through the Division’s Document Filing and Certificate Request Service, or mail or fax it with a Filing Cover Memo.⁵⁶ Filing fees vary with your share structure. If you need faster turnaround, Delaware offers expedited tiers at extra cost:⁷

Next-day service: $50 to $100 (received by 7:00 p.m. EST)
Same-day service: $100 to $200 (received by 2:00 p.m. EST)
Two-hour service: $500 (received by 7:00 p.m. EST)
One-hour service: $1,000 (received by 9:00 p.m. EST)

For electronic submissions, your card or ACH account is charged when the Division processes the order, not at upload.⁵ Approval returns a stamped copy of the Certificate confirming your corporation exists under Delaware law.

Step 2: Organize the Corporation and Issue Stock

Once the state accepts your Certificate, Delaware law requires an organizational meeting to adopt bylaws, elect directors, and handle any other steps needed to get the corporation running. The incorporator holds this meeting if no initial directors were named in the Certificate; the named directors hold it if they were.⁸ A single incorporator can act by written consent instead of holding a formal meeting.

After directors are in place, the board appoints officers. Delaware is flexible on titles and duties, though at least one officer must be responsible for recording minutes of shareholder and director meetings, and one person can hold multiple offices unless the bylaws say otherwise.⁹ The board then authorizes stock issuance to the initial shareholders in exchange for their capital contributions.

Keep all of these early actions in a corporate minute book: bylaws, organizational resolutions, stock ledger, and meeting minutes. These records show the corporation operates as a separate legal entity, which matters when you later seek S corporation tax treatment.

Step 3: Get an EIN From the IRS

Before you can elect S status, open a business bank account, or file tax returns, you need a federal Employer Identification Number. Apply online at irs.gov for free; the number is issued immediately on completing the application.¹⁰ The IRS expects the entity to already be registered with the state before you request an EIN.

Step 4: File Form 2553 to Elect S Status

With the corporation formed and an EIN assigned, you elect S corporation tax treatment by filing IRS Form 2553, “Election by a Small Business Corporation.”¹¹ The election changes how the IRS taxes the entity, not its legal structure under Delaware law. Income, losses, deductions, and credits pass through to shareholders, who report them on their individual returns.

Confirm You Qualify

Your corporation must meet every one of the following requirements:¹²

Domestic corporation organized in the United States. A Delaware corporation qualifies.
100 shareholders or fewer. Members of the same family can count as one shareholder.
Eligible shareholders only: individuals, certain trusts, or estates. Partnerships, other corporations, and nonresident aliens cannot hold shares.
One class of stock. All shares must carry identical rights to distributions and liquidation proceeds; differences in voting rights alone do not create a second class.
Not an ineligible corporation. Banks using the reserve method for bad debts, insurance companies taxed under Subchapter L, and DISCs cannot elect S status.

Complete and Send the Form

Every person who is a shareholder on the day the election is made must sign a consent statement on Form 2553.¹³ The form also asks for the EIN, date of incorporation, and selected tax year. For a Delaware corporation, mail the form to the IRS Service Center in Kansas City, MO 64999, or fax it to 855-887-7734.¹⁴ If your principal place of business is in a western state, you file with the Ogden, UT address instead.

The IRS generally sends a determination letter within 60 days confirming whether the election was accepted. Keep a copy of the submitted form and your proof of mailing or fax confirmation.

File on Time

To have the S election apply for the current tax year, file Form 2553 no later than two months and 15 days after the beginning of that tax year.¹⁵ For a new corporation, that window starts on the earliest date the entity had shareholders, acquired assets, or began doing business. A calendar-year corporation formed on January 1 would need to file by March 15.

Miss the deadline and the election doesn’t kick in until the following tax year, leaving you taxed as a C corporation for the remainder of the current year. The IRS can grant relief for late elections when you had reasonable cause and acted quickly once you discovered the mistake. To request it, write “FILED PURSUANT TO REV. PROC. 2013-30” at the top of Form 2553, include a statement explaining why the election was late, and have all shareholders who held stock during the period between the intended effective date and the filing date sign the consent.¹⁶ Common accepted reasons include reliance on a tax professional who failed to file on time or a good-faith misunderstanding of the deadline.

After the Election: Ongoing Obligations

Pay Yourself a Reasonable Salary

One of the main tax advantages of an S corporation is that only wages, not distributions, are subject to employment taxes. The IRS requires that any shareholder who works for the corporation receive reasonable compensation as salary before taking distributions.¹⁷ “Reasonable” means pay that reflects what someone in a similar role at a comparable company would earn. If the IRS finds a shareholder-employee’s salary unreasonably low (for example, $30,000 in salary with $200,000 in distributions for full-time work), it can reclassify distributions as wages, which triggers back employment taxes plus penalties and interest.

File the Delaware Annual Report and Franchise Tax

Every Delaware corporation must file an annual report and pay franchise tax each year by March 1, regardless of federal tax status.¹⁸ The report is filed through the Division’s website and requires updated information on directors and officers.

Delaware calculates franchise tax two ways, and you pay the lower amount:¹⁹ the authorized shares method (minimum $175 for 5,000 or fewer shares) and the assumed par value capital method (minimum $400, based on gross assets and issued shares). A small S corporation with 1,500 or fewer authorized shares pays the $175 minimum.

Missing the March 1 deadline triggers a $200 penalty.¹⁸ If the corporation fails to pay or file for a full year, the Secretary of State sends a notice, and the charter becomes void if the problem isn’t corrected by the following March 1.²⁰ A voided charter strips the corporation of its authority to operate; reinstatement is possible but adds fees and back taxes.

Register in Other States Where You Operate

Incorporating in Delaware does not authorize your corporation to conduct business in other states. If your operations, employees, or office sit elsewhere, you will likely need to register as a “foreign corporation” there by filing for a certificate of authority. Filing fees typically range from about $100 to $750 depending on the state. Operating without registering can bring fines and, in many states, loss of the ability to file lawsuits in that state’s courts until you qualify.

File Form 1120-S Each Year

Once the S election is accepted, the corporation must file Form 1120-S (U.S. Income Tax Return for an S Corporation) every year the election remains in effect.²¹ For calendar-year corporations, the deadline is March 15, or the next business day if that falls on a weekend. The corporation must also prepare a Schedule K-1 for each shareholder showing their share of income, losses, deductions, and credits, and provide it to shareholders by the same date Form 1120-S is due. Shareholders then report their K-1 figures on their personal returns. The S corporation itself generally pays no federal income tax; the liability passes through to the individual shareholders.

1
Delaware Division of Corporations. Certificate of Incorporation for Stock Corporation
2
Justia Law. Delaware Code Title 8 – Corporations – Section 102
3
Justia Law. Delaware Code Title 8 – Corporations – Section 131
4
Delaware Code Online. Title 8, Chapter 1, Subchapter I – Formation – Section 102
5
State of Delaware. Document Filing and Certificate Request Information – Division of Corporations
6
State of Delaware. Submitting a Request – Division of Corporations
7
State of Delaware. Expedited Services – Division of Corporations
8
Delaware Code Online. Title 8, Chapter 1, Subchapter I – Formation – Section 108
9
Delaware Code Online. Title 8, Chapter 1, Subchapter IV – Directors and Officers – Section 142
10
Internal Revenue Service. Employer Identification Number
11
Internal Revenue Service. About Form 2553, Election by a Small Business Corporation
12
Office of the Law Revision Counsel. 26 U.S. Code 1361 – S Corporation Defined
13
Internal Revenue Service. Form 2553 – Election by a Small Business Corporation
14
Internal Revenue Service. Where to File Your Taxes for Form 2553
15
Office of the Law Revision Counsel. 26 U.S. Code 1362 – Election; Revocation; Termination
16
Internal Revenue Service. Revenue Procedure 2013-30
17
Internal Revenue Service. S Corporation Compensation and Medical Insurance Issues
18
State of Delaware. Annual Report and Tax Information – Division of Corporations
19
State of Delaware. How to Calculate Franchise Taxes – Division of Corporations
20
Justia Law. Delaware Code Title 8 Section 510 – Failure to Pay Tax or File a Complete Annual Report
21
Internal Revenue Service. Instructions for Form 1120-S