Arkansas Corporation - Consent by Shareholders
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FAQ
Qualifications to Elect S Corporation Status It must have no more than 100 shareholders; It has only one class of stock; It must use a December 31 year-end.
All the shareholders must consent to the S corporation election. However, only one share more than 50% of the outstanding stock is required to end the S corporation election.
To file (or 'elect') for S corp status, your business must first be incorporated as a regular C corporation or have filed for LLC status. (Remember: S corp status is a tax designationyou can't 'incorporate' as an S corp.)
The election is not valid unless all shareholders of the corporation at the time of the election consent to the election in the manner provided in paragraph (b) of this section. However, once a valid election is made, new shareholders need not consent to that election.
IRS Form 2553 must be signed and dated by the president, vice president, treasurer, assistant treasurer, chief accounting officer, or any other corporate officer (for example, the tax officer) authorized to sign.
Arkansas no longer requires a separate election to be considered an S Corporation. Taxpayers will file the federal 1120S return along with the Arkansas AR1100S return and will be considered an S Corporation for Arkansas filing purposes.
However, the tax regulations permit companies to issue voting and non-voting stock, even if the voting stock only represents 1% of the issued and outstanding shares. Thus, differences in voting rights are disregarded in determining whether an S corporation has more than one class of stock.
Starting an Arkansas LLC and electing S corp tax status is easy....Step 1: Name Your LLC.Step 2: Choose Your Arkansas Registered Agent.Step 3: File the Arkansas LLC Certificate of Organization.Step 4: Create an LLC Operating Agreement.Step 5: Get an EIN and Complete Form 2553 on the IRS Website.
To register a business as an S corporation, Articles of Incorporation (sometimes called a Certificate of Incorporation or Certificate of Formation), must be filed with the state and the necessary filing fees paid. After incorporation, Form 2553 must be filed with the IRS in order to elect S corporation status.
All shareholders must consent to a subchapter S election. If an election is made within the first two months and 15 days of the tax year for which the election is to be effective, then any person who was a shareholder during that tax year must consent to the election (Reg. §1.1362-6(a)(2) ).
