An S corporation can be authorized to issue 50,000 shares, but the boards of directors can decide to give out 10,000 shares instead of 50,000. That means there are 40,000 shares for the company to issue at another date in the future if they need to increase capital.
The number of authorized shares per company is assessed at the company’s creation and can only be increased or decreased through a vote by the shareholders. If at the time of incorporation the documents state that 100 shares are authorized, then only 100 shares can be issued.
Number of Shareholders
An S corp may have no more than 100 shareholders. However, it may authorize and issue more than 100 shares of stock. It is possible, and very common, for one shareholder to own more than one share.
The owners of a business determine how many shares a company must have to form an S corporation. This can range from 10,000 shares to 1 million shares of S corporation stock. The amount decided on by the owner must be detailed in the Articles of Incorporation when the business is formed.
The number of shares that a company needs to have in order to form an S-corporation is essentially determined by the owners of the business. An S-corporation owner can choose to have as little as 10,000 shares of stock, or as many as a million shares of stock.
Many experts suggest starting with 10,000, but companies can authorize as little as one share. While 10,000 may seem conservative, owners can file for more authorized stocks at a later time. Typically, business owners should choose a number that includes the stocks being issued and some for reservation.
While there is no actual limit to the amount of shares you can purchase in a company, it’s possible that there will be rules or restrictions that may interfere with your ability to buy as many shares as you want.
Limited number of shareholders: An S corp cannot have more than 100 shareholders, meaning it can’t go public and limiting its ability to raise capital from new investors. Other shareholder restrictions: Shareholders must be individuals (with a few exceptions) and U.S. citizens or residents.
Do S corps have to issue stock?
Both S corps and C corps not only can issue stock, but also must issue stock. Without stock being issued, there are no shareholders. Without shareholders, there is no corporation.
So long as you are the sole owner you are the sole shareholder. It’s best to issue the shares to evidence your ownership but if you don’t, you are still the sole shareholder.