How Do I Convert My LLC to an S-Corp in New Jersey?
You don't formally convert your LLC to an S-Corp under New Jersey law. Instead, elect S-Corporation tax treatment by filing IRS Form 2553 with the federal government. Your LLC remains an LLC under N.J.S.A. 42:2C-1 et seq., but the IRS taxes it as an S-Corporation. File Form 2553 within 2 months and 15 days of your tax year start, or by March 15 of the year you want the election effective.
Federal Election Process
File IRS Form 2553 (Election by a Small Business Corporation) directly with the IRS—not New Jersey. Include your Employer Identification Number (EIN). Timely filing makes the election effective for your chosen tax year. Late elections may be accepted if you demonstrate reasonable cause.
Your LLC's legal structure under state law does not change. Only your federal tax classification changes from a disregarded entity or partnership to an S-Corporation.
New Jersey Compliance
New Jersey recognizes your federal S-Corp election for state income tax purposes. You must continue filing annual reports by the last day of your anniversary month, with a $75 filing fee per N.J.S.A. 42:2C-26. No additional state filings are required.
New Jersey taxes S-Corporation income at graduated rates up to 10.75% (N.J.S.A. 54A:1-1 et seq.) on a pass-through basis.
Payroll and Tax Obligations
After electing S-Corp status:
- Pay yourself a reasonable W-2 salary as an employee
- Take remaining profits as distributions
- File federal Form 1120-S annually
- Withhold and remit federal, state, and FICA payroll taxes on wages
- Self-employment tax applies to S-Corporation income
Next Steps
- Consult a CPA or tax attorney to confirm S-Corp election reduces your tax burden
- Obtain an EIN if your LLC lacks one
- Complete and file IRS Form 2553 before the deadline
- Continue filing New Jersey annual reports on schedule
- Update payroll systems to reflect S-Corp tax treatment
Contact the New Jersey Division of Taxation at https://www.nj.gov/treasury/taxation/ for state-specific questions.
This is general information, not legal advice.