Corporate election

When a business owner first incorporate a business as a C corporation, the business must make certain corporate election about the newly formed C corporation in a timely manners. The first few months of the new C corporation is critical. If the new business C corporation does not meet the deadlines for corporate election, the IRS or the state government or even federal government will make the corporate election for the business. Once a business fails to make certain corporate election, it will be difficult and costly to change the corporate elections chosen for it.

1. Corporate election of accounting period

For a C corporation, the business must make corporate election of accounting period. The C corporation can choose:

• a year end accounting period corporate election that is different from the standard December 31, or
• calendar year end.

To make corporate election of accounting period for a new C corporation, you need to fill out the Form SS-4. The Form SS-4 is filled out when a business applies for employer ID number.

2. Corporate election of accounting method

Once the corporate election of accounting period is done, the C corporation needs to make a corporate election of accounting method. This accounting method is to be used for the C corporation when the C corporation business files the first corporate tax return. The choices of accounting methods are:

• Cash accounting method
• Accrual accounting method
• A hybrid accounting method

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