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An S corporation can have only one class of stock, although it can have both voting and non-voting shares. Therefore, there can't be different classes of investors who are entitled to different dividends or distribution rights. Also, there cannot be more than 100 shareholders.

You need to earn at least $40,000 in profit for an S Corp to make sense, though. Otherwise, the costs of forming and running it exceeds its benefits. Of course, the details depend on a variety of factors, including: Salary amount: the owner of an S-Corp can take a salary from the profits.

Yes, it is possible to establish an S-corp as a one-person business. While traditionally S corporations are formed with multiple shareholders, the IRS allows a single individual to set up an S corporation. As an individual, you can be the sole shareholder, director, and employee of the S-corp.

To qualify for S corporation status, the corporation must meet the following requirements: Be a domestic corporation. Have only allowable shareholders. Have no more than 100 shareholders. Have only one class of stock.

One of the pre-requisites to electing your business as an S-Corp is that your business must be a registered entity with a state prior, meaning you need to have a structure in place for your business such as an LLC.

IRS rules restrict ownership in an S Corp to ?allowable shareholders? and specifically prohibit non-resident aliens from owning shares.

Corporations, partnerships, and nonresident aliens cannot be shareholders in an S corporation. If an S corporation sells stock to a business entity, it could lose its S-corporation status and be reclassified as a C corporation.

All shareholders of an S corporation must be individuals, estates, certain specified trusts, or certain tax-exempt organizations ( Code Sec. 1361(b)(1)(B)). Partnerships and C corporations cannot hold stock in an S corporation.

S Corporation Requirements Shareholders or members of S corps must be individuals, estates, or certain types of trusts; S corp shareholders cannot be partnerships, other corporations, or non-U.S. residents. S corps may only have one class of stock. An S corp may have no more than 100 shareholders (or members if an LLC)