S Corporation With Two Shareholders In Minnesota
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However, one of the limitations of an S corporation is that it can have a maximum of 100 shareholders (stockholders). If the number of shareholders exceeds this limit, the corporation may lose its S corporation status and be subject to different tax regulations.
LLCs can have an unlimited number of members; S corps can have no more than 100 shareholders (owners).
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.
To form an S Corporation in Minnesota, you'll need to file Articles of Incorporation with the Secretary of State. Once the corporation is established, you'll need to file IRS Form 2553 to elect S Corporation status.
Advantages: There is no limit on the number of owners a corporation may have, thus allowing the corporation to raise substantial amounts of capital, the life of the business can continue beyond the death of any of the owners, the liability of the owners is limited to the amount of their investment in the firm.
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.
