I need to dissolve an owner's share in an IL S-Corp. Currently there are 2 owners. Would I still be able to keep the S-Corp with just one owner?
1 partner needs to dissolve their stake so the full company would be under my name. I live in CA and will be based there still. I am not sure how much business would still be in IL. Am I able to keep the S-Corp even though my IL based partner is no longer present and I don't live in IL? If I plan to do more work in CA, would I need to set up a foreign corporation in CA, or can it still operate as is? It is a national/global business. Is it better to just close the business and set up a new one with just myself as the owner?
1 Answer from Attorneys
An S corporation can have a single shareholder. An S corporation is simply a corporation that has made an election to be treated as a small business corporation under the Internal Revenue Code. All states allow a corporation to have a single shareholder.
A corporation can be domiciled anywhere, so you can keep the corporation as an Illinois corporation. Whether you should is another question. If the corporation is doing business in California, you don't need to set up a new corporation but the existing corporation would probably need to register as a foreign corporation doing business in that state. You might be better off, depending on the circumstances, to change the domicile to California, particularly if the company is no longer doing business in Illinois.
Dissolving the corporation is a taxable event, so whether it is better to dissolve the existing corporation and set up a new one, or keep the old one, is a question you should get professional advice on.
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