Becoming an S Corporation is an election designed for “small business corporations.” However, that phrase doesn’t refer to the size of the business in terms of revenues or assets. The rules are generally getting at the number and type of owners the business has.
The basic requirements to elect S are as follows:
– Be a domestic corporation
– Have only allowable shareholders
– May be individuals, certain trusts, and estates and
– May not be partnerships, corporations or non-resident alien shareholders
– Have no more than 100 shareholders
– Have only one class of stock
– Not be an ineligible corporation (i.e. certain financial institutions, insurance companies, and domestic international sales corporations).