One reason many companies do not organize themselves as an s corporation is that this form of business:

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Business

Jovanni

13 February, 23:04

One reason many companies do not organize themselves as an s corporation is that this form of business:

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Answers (1)

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Niko Arellano · Answer 1

S type corporation is difficult to register as it has a particular eligibility restriction, which many businesses are unable to meet.

Explanation:

There are specific pre-requisites before a company may apply as an S corporation

It implies that corporation shareholders must be U. S. residents only who directly own the shares. Maximum 100 shareholders can be part of S corporation. The stock options are restricted to one class only.

The limited stock options, no foreign investment challenges and limitation of maximum shareholders create a barrier to open S type corporation. So the answer is S type corporation is difficult to register as it has a particular eligibility restriction, which many businesses are unable to meet.