How Do I Convert My LLC to an S-Corp in Texas?

An LLC cannot formally "convert" to an S-Corp under Texas law. Instead, file IRS Form 2553 (Election by a Small Business Corporation) with the federal IRS to elect S-Corp tax treatment. Your LLC's legal structure remains unchanged under Tex. Bus. Org. Code § 101.001; only your federal tax classification changes. No state filing is required in Texas.

The Process

Federal Election Only

File Form 2553 with the IRS to be taxed as an S-Corp. The election is effective the first day of your tax year if filed by March 15 of that year, or within 2 months and 15 days of your LLC's formation date. Late elections require IRS approval with a statement of reasonable cause.

Your LLC continues operating under Texas law with full liability protection. The Texas Secretary of State registration remains unchanged—no amendment to your Articles of Organization is needed.

Texas Compliance Unchanged

Your LLC must continue filing the annual Public Information Report (PIR) with the Texas Comptroller by May 15 (Tex. Tax Code § 171.0001). You remain subject to Texas franchise tax under Tex. Tax Code Ch. 171 unless your annualized revenue does not exceed $2,650,000 (2026 threshold). S-Corp election does not eliminate this state obligation.

Key Requirements

Multi-member LLC status (single-member LLCs cannot elect S-Corp status federally)
U.S. ownership only (all members must be U.S. citizens or resident aliens)
EIN required (obtain from IRS if your LLC lacks one)
Single class of stock (S-Corps cannot have preferred shares)
≤100 shareholders (members count as shareholders)

Tax Benefits

The primary advantage is federal self-employment tax savings. As an S-Corp, you pay yourself a reasonable salary (subject to payroll tax) and take remaining profits as distributions (not subject to self-employment tax). This can reduce your overall federal tax burden compared to partnership taxation.

Next Steps

Confirm your LLC meets S-Corp eligibility requirements
Obtain an EIN from irs.gov if needed
Complete Form 2553 and file with the IRS
Continue filing annual PIR reports with the Texas Comptroller by May 15
Consult a CPA regarding estimated quarterly tax payments (April 15, June 15, September 15, January 15)

This is general information, not legal advice. Consult a tax professional or attorney before electing S-Corp status.