Navigating the complexities of business structures can be daunting, but WHAT.EDU.VN simplifies it for you, especially when considering an S corporation. An S corporation, or S corp, is a business structure that allows corporate income, losses, deductions, and credits to pass through directly to its shareholders, avoiding double taxation. Eager to explore if an S corp aligns with your business goals? Read on and discover the streamlined path to free answers and expert guidance on WHAT.EDU.VN. Dive in to understand pass-through taxation, shareholder benefits, and small business advantages.
1. What Is An S Corporation?
An S corporation, often referred to as an S corp, is a type of corporation that has elected to pass its income, losses, deductions, and credits through to its shareholders for federal income tax purposes. This means that instead of the corporation paying taxes on its profits, the profits and losses are reported on the shareholders’ individual tax returns. This structure is designed to avoid the double taxation that can occur with C corporations, where the corporation pays taxes on its profits, and then shareholders pay taxes again when they receive dividends. According to the IRS, an S corporation is responsible for tax on certain built-in gains and passive income at the entity level.
1.1 Key Characteristics of S Corporations
- Pass-Through Taxation: The primary feature of an S corporation is its pass-through taxation. The business itself does not pay federal income tax. Instead, the profits and losses are passed through to the owners (shareholders), who report them on their individual income tax returns.
- Limited Liability: Like other corporations, an S corporation provides limited liability protection to its owners. This means that the personal assets of the shareholders are generally protected from business debts and lawsuits.
- Shareholder Requirements: S corporations have specific rules about who can be a shareholder. For example, shareholders must generally be individuals, estates, or certain types of trusts. Partnerships, C corporations, and nonresident aliens are typically not allowed to be shareholders.
- Number of Shareholders: S corporations are limited in the number of shareholders they can have. Currently, the limit is 100 shareholders.
- One Class of Stock: S corporations are generally allowed to have only one class of stock. This means that all shareholders must have the same rights to profits and assets.
1.2 How Does an S Corporation Work?
To understand how an S corporation works, consider the following steps:
- Formation: A business starts as a regular corporation (C corporation) under state law.
- Election: The corporation then files Form 2553 with the IRS to elect to be treated as an S corporation. All shareholders must sign this form.
- Operation: The S corporation operates like any other corporation, but with the tax benefits of pass-through taxation.
- Taxation: The corporation files an information return (Form 1120-S) to report its income, deductions, and credits. The shareholders then report their share of the corporation’s income or loss on their individual tax returns (Schedule K-1).
1.3 S Corporation vs. C Corporation
The main difference between an S corporation and a C corporation lies in how they are taxed. C corporations are subject to double taxation, meaning the corporation pays taxes on its profits, and shareholders pay taxes on dividends they receive. S corporations avoid this double taxation because profits and losses are passed through to the shareholders’ individual tax returns.
| Feature | S Corporation | C Corporation |
|---|---|---|
| Taxation | Pass-through taxation; no double taxation | Double taxation; corporate tax and shareholder dividend tax |
| Shareholders | Limited to 100; must be individuals, estates, or trusts | No restrictions |
| Stock | Generally one class of stock | Can have multiple classes of stock |
| Complexity | More complex due to IRS requirements | Simpler in terms of shareholder and stock restrictions |
| Filing Requirement | File Form 1120-S | File Form 1120 |
1.4 S Corporation vs. LLC
An LLC (Limited Liability Company) is another business structure that offers pass-through taxation and limited liability. However, there are some key differences between an S corporation and an LLC:
| Feature | S Corporation | LLC (Limited Liability Company) |
|---|---|---|
| Taxation | Pass-through taxation; shareholders can be employees | Pass-through taxation; members are usually self-employed |
| Self-Employment Tax | Shareholders who are employees pay only payroll taxes on salary | Members pay self-employment tax on their entire share of the profits |
| Structure | More formal structure with shareholders, directors, and officers | More flexible management structure with members and managers |
| Complexity | More complex due to IRS requirements | Simpler in terms of compliance |
| Filing Requirement | File Form 1120-S | File Form 1065 (Partnership Return) or Schedule C (if single-member LLC) |
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2. What Are The Benefits of Forming An S Corporation?
Forming an S corporation comes with several potential benefits that can make it an attractive option for small business owners. These advantages primarily revolve around tax savings, liability protection, and increased credibility.
2.1 Tax Savings
One of the most significant benefits of an S corporation is the potential for tax savings. Here’s how:
- Avoiding Double Taxation: As previously mentioned, S corporations avoid the double taxation that C corporations face. Profits and losses are passed through to the shareholders’ individual tax returns, so the corporation itself does not pay federal income tax.
- Self-Employment Tax Savings: Owners who work for their S corporation can be classified as employees. This means they can pay themselves a reasonable salary and take the remaining profits as distributions. The salary is subject to payroll taxes (Social Security and Medicare), but the distributions are not. This can result in significant self-employment tax savings. According to IRS guidelines, the salary must be reasonable and commensurate with the services provided.
2.2 Limited Liability Protection
Like other corporate structures, an S corporation provides limited liability protection to its owners. This means that the personal assets of the shareholders are generally protected from business debts and lawsuits. This protection can be a significant advantage for entrepreneurs who want to shield their personal wealth from potential business risks.
2.3 Credibility
Forming an S corporation can add credibility to a business. The corporate structure can signal to customers, suppliers, and lenders that the business is serious and well-established. This can be particularly important for businesses that are looking to attract investors or secure financing.
2.4 Perpetual Existence
Unlike sole proprietorships or partnerships, an S corporation can have perpetual existence. This means that the business can continue to operate even if the owners leave or pass away. This can provide stability and continuity for the business, which can be especially important for long-term planning.
2.5 Potential Drawbacks
While there are many benefits to forming an S corporation, there are also some potential drawbacks to consider:
- Complexity: S corporations have more complex compliance requirements than sole proprietorships or partnerships. This includes filing Form 1120-S annually and adhering to strict rules about shareholder eligibility and stock structure.
- Cost: Forming and maintaining an S corporation can be more expensive than other business structures. This includes legal and accounting fees, as well as state filing fees.
- Scrutiny: S corporations may face greater scrutiny from the IRS, particularly regarding the reasonableness of shareholder salaries.
| Benefit | Description |
|---|---|
| Tax Savings | Avoids double taxation and can lead to self-employment tax savings by paying shareholders a reasonable salary and taking the remaining profits as distributions. |
| Limited Liability | Protects the personal assets of shareholders from business debts and lawsuits. |
| Credibility | Can enhance the business’s reputation with customers, suppliers, and lenders. |
| Perpetual Existence | Allows the business to continue operating even if the owners leave or pass away. |
| Potential Drawbacks | Complexity in compliance, costs for formation and maintenance, and potential scrutiny from the IRS regarding the reasonableness of shareholder salaries. |
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3. What Are The Requirements To Qualify For S Corporation Status?
To qualify for S corporation status, a corporation must meet several specific requirements set forth by the IRS. These requirements ensure that only eligible businesses can take advantage of the tax benefits associated with S corporations.
3.1 Basic Requirements
The fundamental requirements to qualify for S corporation status include:
- Domestic Corporation: The corporation must be a domestic corporation, meaning it must be organized in the United States or under the laws of the United States or any state.
- Eligible Shareholders: The corporation must have only allowable shareholders. This includes individuals, certain trusts, and estates. Partnerships, C corporations, and nonresident aliens are not allowed to be shareholders.
- Number of Shareholders: The corporation must have no more than 100 shareholders. This limit can impact larger businesses considering S corporation status.
- One Class of Stock: The corporation must have only one class of stock. This means that all shares must have the same rights to profits and assets. Differences in voting rights are permitted, but there cannot be differences in dividend or liquidation rights.
- Ineligible Corporations: The corporation must not be an ineligible corporation. This includes certain financial institutions, insurance companies, and domestic international sales corporations.
3.2 Detailed Explanation of Each Requirement
Let’s delve into each of these requirements to provide a clearer understanding:
- Domestic Corporation: This requirement is straightforward. The corporation must be legally formed in the U.S.
- Eligible Shareholders: This is a crucial requirement. The IRS is very specific about who can be a shareholder in an S corporation.
- Individuals: U.S. citizens and resident aliens are eligible to be shareholders.
- Estates: The estate of a deceased shareholder can hold S corporation stock.
- Certain Trusts: Some trusts are allowed to be shareholders, including:
- Qualified Subchapter S Trusts (QSSTs): These trusts must meet specific requirements, including that all income is distributed to one U.S. citizen or resident.
- Electing Small Business Trusts (ESBTs): These trusts can have multiple beneficiaries, but they must meet certain other requirements.
- Ineligible Shareholders: Partnerships, C corporations, and nonresident aliens are not permitted to be shareholders in an S corporation.
- Number of Shareholders: The limit of 100 shareholders can be a constraint for growing businesses. Each individual, estate, or trust counts as one shareholder, regardless of how many shares they own.
- One Class of Stock: This requirement ensures that all shareholders have equal rights to the corporation’s profits and assets. The IRS allows for differences in voting rights, but all other rights must be the same. This means that the corporation cannot have preferred stock or other types of stock that give certain shareholders preferential treatment.
- Ineligible Corporations: Certain types of corporations are not allowed to elect S corporation status. This includes:
- Certain Financial Institutions: Banks and other financial institutions are generally not eligible.
- Insurance Companies: Companies that are taxed as insurance companies under the tax code are not eligible.
- Domestic International Sales Corporations (DISCs): These corporations are designed for export activities and are not eligible for S corporation status.
3.3 How to Elect S Corporation Status
To become an S corporation, the corporation must file Form 2553, Election by a Small Business Corporation, with the IRS. This form must be signed by all shareholders and filed either:
- No more than two months and 15 days after the beginning of the tax year the election is to take effect, or
- At any time during the tax year preceding the tax year it is to take effect.
3.4 Maintaining S Corporation Status
Once a corporation has elected S corporation status, it must continue to meet the requirements to maintain its status. Failure to meet these requirements can result in the termination of the S corporation election. This can have significant tax consequences for the business and its shareholders.
| Requirement | Description |
|---|---|
| Domestic Corporation | Must be organized in the United States or under the laws of the United States or any state. |
| Eligible Shareholders | Shareholders must be individuals, certain trusts, or estates. Partnerships, C corporations, and nonresident aliens are not allowed. |
| Number of Shareholders | Limited to a maximum of 100 shareholders. |
| One Class of Stock | Must have only one class of stock, ensuring all shares have the same rights to profits and assets (differences in voting rights are permitted). |
| Ineligible Corporations | Certain financial institutions, insurance companies, and domestic international sales corporations are not eligible. |
| Election Process | File Form 2553 with the IRS, signed by all shareholders, within the specified timeframe. |
| Maintaining Status | Must continuously meet all requirements to avoid termination of S corporation election. |
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4. What Is Form 2553 And How Do I File It?
Form 2553, “Election by a Small Business Corporation,” is the form used by a corporation to elect to be treated as an S corporation for federal income tax purposes. Filing this form is a critical step in the process of becoming an S corporation.
4.1 Purpose of Form 2553
The primary purpose of Form 2553 is to notify the IRS that a corporation wishes to be taxed under Subchapter S of the Internal Revenue Code. By filing this form, the corporation is electing to pass its income, losses, deductions, and credits through to its shareholders, avoiding double taxation.
4.2 Who Needs to File Form 2553?
Any domestic corporation that meets the requirements for S corporation status and wishes to be taxed as an S corporation must file Form 2553. This includes corporations that are newly formed and existing C corporations that want to change their tax status.
4.3 When to File Form 2553
The timing of filing Form 2553 is crucial. The form must be filed either:
- No more than two months and 15 days after the beginning of the tax year the election is to take effect, or
- At any time during the tax year preceding the tax year it is to take effect.
For example, if a corporation wants to be treated as an S corporation for the 2024 tax year, the corporation must file Form 2553 by March 15, 2024, or at any time during 2023.
If the form is filed late, the S corporation election will not take effect until the following tax year. The IRS may grant relief for late elections in certain circumstances, but it is best to file the form on time.
4.4 How to Fill Out Form 2553
Form 2553 is divided into several parts, each requiring specific information about the corporation and its shareholders. Here is a step-by-step guide to completing the form:
- Part I: Election Information:
- Name and Address: Enter the corporation’s legal name and address.
- Employer Identification Number (EIN): Enter the corporation’s EIN.
- Date of Incorporation: Enter the date the corporation was incorporated.
- Election Date: Enter the date the corporation wants the S corporation election to take effect.
- Tax Year: Indicate whether the corporation will use a calendar year or a fiscal year.
- Principal Business Activity: Describe the corporation’s principal business activity and product or service.
- Part II: Shareholder Consent Statement:
- Each shareholder must sign and date the form, providing their name, address, Social Security number (SSN) or EIN, and the number of shares they own.
- If a shareholder is signing as a representative of a trust or estate, they must indicate their title and the name of the trust or estate.
- Part III: Qualified Subchapter S Trust (QSST) Election (if applicable):
- If any shareholders are QSSTs, the trustee or current income beneficiary must complete this section.
- Provide the name, address, and EIN of the trust, as well as the date of the QSST election.
- Part IV: Electing Small Business Trust (ESBT) Election (if applicable):
- If the corporation has an ESBT as a shareholder, the trustee must complete this section.
- Provide the name, address, and EIN of the trust, as well as the date of the ESBT election.
4.5 Where to File Form 2553
The IRS provides specific instructions on where to file Form 2553 based on the corporation’s location. These instructions can be found on the IRS website or in the instructions for Form 2553. Generally, the form is mailed to the IRS Service Center that serves the state where the corporation’s principal place of business is located.
4.6 Common Mistakes to Avoid
- Missing Signatures: Ensure that all shareholders sign and date the form. Missing signatures can cause the IRS to reject the election.
- Incorrect Information: Double-check all information, including names, addresses, EINs, and SSNs, to ensure accuracy.
- Late Filing: File the form on time to avoid delays in the S corporation election taking effect.
- Incomplete Form: Complete all applicable parts of the form, including the QSST or ESBT election if necessary.
| Aspect | Details |
|---|---|
| Purpose | Elect to be treated as an S corporation for federal income tax purposes. |
| Who Files | Any domestic corporation meeting S corporation requirements wishing to be taxed as an S corporation. |
| Filing Deadline | No more than two months and 15 days after the beginning of the tax year the election is to take effect, or at any time during the tax year preceding the tax year it is to take effect. |
| Completion Steps | Part I: Election Information (Name, Address, EIN, Date of Incorporation, Election Date, Tax Year, Business Activity). Part II: Shareholder Consent Statement (Signatures, Names, Addresses, SSNs/EINs, Shares Owned). Part III: QSST Election (if applicable). Part IV: ESBT Election (if applicable). |
| Where to File | Refer to IRS instructions based on the corporation’s location. Generally mailed to the IRS Service Center serving the state where the corporation’s principal place of business is located. |
| Common Mistakes | Missing signatures, incorrect information, late filing, incomplete form. |
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5. What Are The Filing Requirements For S Corporations?
S corporations have specific filing requirements with the IRS. Understanding these requirements is essential to ensure compliance and avoid penalties.
5.1 Key Filing Requirements
The main filing requirements for S corporations include:
- Form 1120-S: U.S. Income Tax Return for an S Corporation: This form is used to report the income, deductions, and credits of the S corporation. It is an informational return, as the corporation itself does not pay federal income tax.
- Schedule K-1 (Form 1120-S): Shareholder’s Share of Income, Deductions, Credits, etc.: This form is used to report each shareholder’s share of the S corporation’s income, deductions, and credits. Shareholders use this information to report their share of the S corporation’s income or loss on their individual tax returns.
- Employment Tax Returns: If the S corporation has employees, it must file employment tax returns, such as Form 941 (Employer’s Quarterly Federal Tax Return) and Form 940 (Employer’s Annual Federal Unemployment (FUTA) Tax Return).
5.2 Form 1120-S: U.S. Income Tax Return for an S Corporation
Form 1120-S is the primary form used by S corporations to report their financial activities to the IRS. The form includes sections for reporting income, deductions, credits, and other information.
- Income: The corporation reports all sources of income, including sales, services, and investments.
- Deductions: The corporation reports all deductible expenses, such as salaries, rent, and depreciation.
- Credits: The corporation reports any tax credits it is eligible for, such as the research and development credit.
- Other Information: The corporation provides other information, such as the number of shareholders and the type of business activity.
5.3 Schedule K-1 (Form 1120-S): Shareholder’s Share of Income, Deductions, Credits, Etc.
Schedule K-1 is used to report each shareholder’s share of the S corporation’s income, deductions, and credits. The information on Schedule K-1 is used by the shareholders to report their share of the S corporation’s income or loss on their individual tax returns (Form 1040).
- Shareholder Information: The form includes information about the shareholder, such as their name, address, and Social Security number (SSN) or EIN.
- Share of Income: The form reports the shareholder’s share of the S corporation’s income, including ordinary business income, rental income, and investment income.
- Share of Deductions: The form reports the shareholder’s share of the S corporation’s deductions, such as depreciation, depletion, and amortization.
- Share of Credits: The form reports the shareholder’s share of the S corporation’s credits, such as the research and development credit and the foreign tax credit.
5.4 Employment Tax Returns
If the S corporation has employees, it must file employment tax returns to report and pay employment taxes. These taxes include:
- Social Security and Medicare Taxes: These taxes are paid by both the employer and the employee. The employer withholds the employee’s share of the taxes from their wages and remits both the employer’s and employee’s shares to the IRS.
- Federal Income Tax Withholding: Employers are required to withhold federal income tax from their employees’ wages and remit the tax to the IRS.
- Federal Unemployment (FUTA) Tax: This tax is paid by employers to fund unemployment benefits for workers who lose their jobs.
5.5 Filing Deadlines
The filing deadlines for S corporation tax returns are:
- Form 1120-S: Due by March 15 for calendar-year corporations.
- Schedule K-1: Must be provided to shareholders by March 15 for calendar-year corporations.
- Form 941: Due quarterly, by the last day of April, July, October, and January.
- Form 940: Due by January 31.
5.6 E-Filing Requirements
S corporations that are required to file 10 or more returns in a calendar year (calculated by aggregating all returns of any type) are required to e-file their Forms 1120-S, effective for returns required to be filed on or after January 1, 2024.
| Filing Requirement | Form | Deadline |
|---|---|---|
| Income Tax Return | Form 1120-S: U.S. Income Tax Return for an S Corporation | March 15 for calendar-year corporations |
| Shareholder Information | Schedule K-1 (Form 1120-S): Shareholder’s Share of Income, Deductions, Credits, etc. | March 15 for calendar-year corporations |
| Employment Taxes | Form 941: Employer’s Quarterly Federal Tax Return | Quarterly, by the last day of April, July, October, and January |
| Unemployment Tax | Form 940: Employer’s Annual Federal Unemployment (FUTA) Tax Return | January 31 |
| E-Filing Requirement | Required for S corporations filing 10 or more returns annually | Effective for returns required to be filed on or after January 1, 2024 |
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6. What Are The Tax Implications For S Corporation Shareholders?
Being a shareholder in an S corporation has specific tax implications that individuals need to understand to ensure proper tax planning and compliance.
6.1 Pass-Through Taxation
The most significant tax implication for S corporation shareholders is pass-through taxation. This means that the S corporation’s income, losses, deductions, and credits are passed through to the shareholders’ individual tax returns. The shareholders then report their share of these items on their Form 1040.
6.2 Schedule K-1 (Form 1120-S)
Each S corporation shareholder receives a Schedule K-1 from the corporation. This form provides a summary of the shareholder’s share of the S corporation’s income, deductions, credits, and other items. Shareholders use the information on Schedule K-1 to prepare their individual tax returns.
6.3 Ordinary Business Income
One of the most common items reported on Schedule K-1 is ordinary business income. This is the profit or loss from the S corporation’s business operations. Shareholders report their share of the ordinary business income on Schedule E (Form 1040), Supplemental Income and Loss.
6.4 Dividends
S corporations can also distribute dividends to their shareholders. These dividends are typically treated as ordinary income and are reported on Form 1040. However, if the dividends are considered “qualified dividends,” they may be taxed at a lower rate.
6.5 Capital Gains and Losses
If the S corporation sells capital assets, such as stocks or real estate, the capital gains or losses are passed through to the shareholders. Shareholders report their share of the capital gains or losses on Schedule D (Form 1040), Capital Gains and Losses.
6.6 Deductions
S corporation shareholders may also be able to deduct certain expenses related to their investment in the S corporation. These deductions may include:
- Home Office Deduction: If the shareholder uses a portion of their home exclusively and regularly for business purposes, they may be able to deduct a portion of their home expenses.
- Business Expenses: Shareholders may be able to deduct other business expenses, such as travel expenses and professional fees.
6.7 Self-Employment Tax
One of the key tax planning strategies for S corporation shareholders is to pay themselves a reasonable salary for the services they provide to the corporation. This is because only the salary is subject to Social Security and Medicare taxes (self-employment tax). Any profits taken as distributions are not subject to these taxes. According to IRS guidelines, the salary must be reasonable and commensurate with the services provided.
6.8 State Taxes
In addition to federal taxes, S corporation shareholders may also be subject to state taxes. These taxes may include state income tax, franchise tax, and other state taxes.
| Tax Aspect | Description |
|---|---|
| Pass-Through Taxation | Income, losses, deductions, and credits are passed through to the shareholders’ individual tax returns. |
| Schedule K-1 | Shareholders receive this form summarizing their share of the S corporation’s income, deductions, credits, and other items. |
| Ordinary Income | Profit or loss from the S corporation’s business operations, reported on Schedule E (Form 1040). |
| Dividends | Distributions to shareholders, typically treated as ordinary income and reported on Form 1040. Qualified dividends may be taxed at a lower rate. |
| Capital Gains/Losses | Gains or losses from the sale of capital assets, reported on Schedule D (Form 1040). |
| Deductions | Shareholders may be able to deduct certain expenses, such as home office expenses and other business expenses. |
| Self-Employment Tax | Only the salary paid to shareholders for services provided is subject to Social Security and Medicare taxes. Distributions are not subject to these taxes. |
| State Taxes | Shareholders may also be subject to state income tax, franchise tax, and other state taxes. |
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7. What Is The Difference Between Salary And Distributions In An S Corporation?
In an S corporation, understanding the distinction between salary and distributions is crucial for tax planning and compliance. These two forms of compensation are treated differently for tax purposes, and it’s important for S corporation shareholders who are also employees to understand the rules.
7.1 Salary
Salary refers to the wages paid to an S corporation shareholder who is also an employee of the corporation. This compensation is for the services the shareholder provides to the company. The IRS requires that S corporation shareholders who work for the company be paid a reasonable salary.
7.2 Distributions
Distributions are the profits that are passed through to the shareholders of an S corporation. These distributions are not considered wages and are not subject to Social Security and Medicare taxes.
7.3 Key Differences
The key differences between salary and distributions are:
- Tax Treatment: Salary is subject to Social Security and Medicare taxes (self-employment tax), while distributions are not.
- Deductibility: The S corporation can deduct the salary paid to shareholders as a business expense. Distributions are not deductible.
- Reasonableness: The IRS requires that the salary paid to shareholders be reasonable. This means that the salary must be commensurate with the services provided and comparable to what other employees in similar positions would be paid.
7.4 Why Is the Distinction Important?
The distinction between salary and distributions is important for tax planning purposes. By paying themselves a reasonable salary and taking the remaining profits as distributions, S corporation shareholders can minimize their self-employment tax liability.
However, it is important to note that the IRS scrutinizes S corporation shareholder salaries to ensure that they are reasonable. If the IRS determines that a shareholder is not being paid a reasonable salary, it may reclassify some of the distributions as wages, which would be subject to Social Security and Medicare taxes.
7.5 How to Determine a Reasonable Salary
Determining a reasonable salary for an S corporation shareholder can be challenging. Factors to consider include:
- The shareholder’s skills and experience.
- The nature of the shareholder’s services to the corporation.
- The amount of time the shareholder spends working for the corporation.
- The salaries paid to other employees in similar positions.
- Industry standards.
| Aspect | Salary | Distributions |
|---|---|---|
| Definition | Wages paid to a shareholder who is also an employee. | Profits passed through to shareholders. |
| Tax Treatment | Subject to Social Security and Medicare taxes. | Not subject to Social Security and Medicare taxes. |
| Deductibility | Deductible by the S corporation as a business expense. | Not deductible. |
| Reasonableness | Must be reasonable and commensurate with the services provided. | Not subject to reasonableness requirement. |
| IRS Scrutiny | IRS scrutinizes to ensure salaries are reasonable. | Less IRS scrutiny. |
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8. How To Dissolve An S Corporation?
Dissolving an S corporation involves a series of steps to legally terminate the business entity. It’s crucial to follow these steps to avoid potential legal and financial issues.
8.1 Steps to Dissolve an S Corporation
- Vote to Dissolve: The first step is for the shareholders to vote to dissolve the S corporation. The specific requirements for the vote will depend on the corporation’s bylaws and state law.
- File Articles of Dissolution: Once the shareholders have voted to dissolve the corporation, the next step is to file articles of dissolution with the state. The articles of dissolution provide notice to the state that the corporation is being dissolved.
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