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Jonathan Tierney
Jonathan Tierney, Certified Public Accountant
Category: Capital Gains and Losses
Satisfied Customers: 322
Experience:  Tax Accountant at Praxair, Inc.
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This is our Corporation i would like to sell a portion of my

Customer Question

hello this is our Corporation
i would like to sell a portion of my corporation to 2 of my staff, maybe 20% or so, they have been working with me for 4 years now and I would like to make sure they stay with me , any advise how can i do that? i want to make sure that you do not interfere
with Management by any means or if i decide to sell the store one day.
Submitted: 1 year ago.
Category: Capital Gains and Losses
Expert:  Jonathan Tierney replied 1 year ago.

Hi, my name is ***** ***** my goal here is to provide you with the most complete and accurate answer possible.

You can create a second class of nonvoting stock common stock that has equal rights to distributions as the class of stock that you own. This would allow you to retain complete control over the business, while giving your employees rights to some of the profits in the company. S corporations are only allowed to have one class of stock in terms of rights to corporate distributions to shareholder, so both classes would need to have equal rights to distributions. For example, is you sell a 20% interest and you decide to distribute $80 to yourself, the other shareholders would have to receive $20. If the two classes of stock to not have identical rights to distributions, then your corporation’s S election would terminate automatically.

I hope this answers your question. Please let me know if I can clarify anything or answer any additional questions, and I would greatly appreciate positive feedback. Thanks, Jonathan

Customer: replied 1 year ago.
hello, how can I do this through an accounting method?
Expert:  Jonathan Tierney replied 1 year ago.

There would not be any accounting method change. You would file a change to the articles of corporation with the Florida Secretary of the State creating a second class of stock and issue your employees stock certificates for their shares.