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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10793
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I am the owner of a S Corp with 51% of the shares, If i need

Customer Question

Hi There, I am the owner of a S Corp with 51% of the shares, If i need to issue more shares to the company for growth and potential shareholders, how do i issue more shares of stock without loosening my 51%, Can i issue myself stocks for bonus and wage?
Submitted: 5 months ago.
Category: Tax
Expert:  Lane replied 5 months ago.

Hi My name's Lane. Looks like no ones picking this up ... I can help here.

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First, S-Corp is just a federal tax election. Is the underlying company at the state level (all corporate law is state law) a corporation or an LLC?

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Also, it's important to distinguish between authorized and outstanding shares. If you originally filed articles of in corporation with your secretary of state as a corporation, and then filed (or simultaneously filed, as often happens when you use a firm to do things) the 2553 to be taxed as an S-Corp ... you would have delineated this with the state.

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Authorized shares are defined as those available to issue to investors, and the total number is ***** in a company's legal formation documents.

...Shares that are issued originally, or sold to investors, from the available number of authorized shares are known as outstanding shares....But, your intuition is good. The only way to maintain that 51% ownership (ALTHOUGH the by-laws and board of directors are also where control comes from) is to own more of those authorized shares yourself (converting them to outstanding shares) ...You can do this through stock bonuses, or by paying in additonal capital and buying more of the authorized shares.....Let me know what question you have from here...Lane......I have a law degree, with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance & tax, as well as CFP® and CRPS designations. - I’ve been providing financial, Social Security/Medicare, estate, corporate, both for-profit and non-profit, and tax advice on three continents, since 1986

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